Insurance Denials and Employer Liability in Sexual Abuse Claims

Insurance Denials and Employer Liability in Sexual Abuse Claims

Attorneys from the Anderson Kill firm explain in a Risk Management Magazine article that when claims are filed by survivors of sexual abuse against both the alleged abuser and the employer, the employer’s liability insurance is often a crucial source of financial recovery. However, insurers may attempt to deny these claims by arguing that the employer “expected or intended” the abuse—a defense that is generally inapplicable. 

Legal precedents establish that the insurer bears the burden of proof in denying coverage based on such exclusions. The New York Court of Appeals in Tonoga, Inc. v. New Hampshire Insurance Co. (2022) ruled that insurers must unambiguously prove the exclusion applies to preclude coverage.

Even without explicit exclusions, the authors note that insurers sometimes claim that the policyholder must prove they did not expect or intend the harm. However, courts like the Vermont Supreme Court in State v. CNA Insurance Companies (2001) have determined that if no evidence of intent to harm exists, the policy should favor the insured. Insurers might argue that general awareness of a culture of abuse equates to expecting specific instances of abuse, but this argument typically fails.

When it comes to employer liability in sexual abuse cases, Courts have consistently held that negligence claims against employers based on employees’ intentional acts can be covered as “occurrences” under liability policies. The “expected or intended” exclusion generally does not apply unless the insured intended the damages. 

Recent legislative changes have extended or waived statutes of limitations for childhood sexual abuse survivors, leading to numerous lawsuits. Despite aggressive challenges from insurers, they face a high burden in proving the “expected or intended” defense, and policyholders should insist on the coverage they are entitled to.