New York’s new Child Victims Act took effect last week. As we discussed in a recent blog, the act revives claims for childhood sexual abuse that were previously barred by statutes of limitation. Victims now have one year from last week to bring any claims or lawsuits against the alleged perpetrators of childhood sexual abuse, without facing a statute of limitations defense.
Everyone can understand that the Child Victims Act will generate a substantial number of lawsuits in New York. What they may not know is that the alleged perpetrators will also be filing an enormous number of lawsuits against their insurance companies, seeking coverage for those claims.
Perhaps even more surprising is that many insurance companies will have to cover these claims.
WHY IS THERE COVERAGE?
Most of the insurance policies in play are going to be general liability policies, and those policies covered “occurrences“. Occurrences in those policies are typically defined as an accident which was unexpected, unintended, and unforeseen by the insurance policyholder. The lawsuits by the victims are going to allege negligence, not against the actual individual who committed the sexual abuse, but against those organizations and people who the perpetrator was affiliated with or worked for. The claimants will allege negligence in the hiring of people that committed the acts, negligence in the training of the people that committed the acts and negligence in the supervision and or retention of the people that committed the acts. Negligent hiring, training, supervision, and retention are all claims that are covered under the vast majority of policies for which coverage will be sought.
The insurance companies will argue, however, that these acts were not unexpected or unintended because, in many cases, the supervisors or people/businesses with whom the perpetrators were affiliated knew or should have known about the conduct. Therefore, the conduct was not unexpected, unintended or unforeseen.
Battles surrounding the definition of “occurrence“ will be hard-fought in court, with enormous amounts of money at stake.
PROOF OF COVERAGE
Another major issue for insurance policyholders will be trying to determine and discover what insurance coverage they had in force at the time the alleged acts were committed. Many of these claims will be quite old, potentially going back as far as the much of the life span of some of the victims.
Determining what coverage may have existed that could be available for these claims will be a significant challenge.
To discover the existence of old insurance policies, insurance policyholders will begin by combing through old files and an all-out document search. If they cannot locate the actual policies, they can still find evidence of the existence of insurance coverage, sufficient to prove that coverage existed. For example, insureds can contact former insurance brokers and former insurance companies. In addition, insureds should be able to prove existence of insurance coverage and policies that they cannot locate through secondary evidence. Secondary evidence can include letters describing coverage, certificates of insurance, terms and conditions of insurance policies issued before and after coverage that is missing, specimen insurance policy forms, etc. Finally, an expert called an insurance archaeologist can be hired to assist in the process.
If a claim has been made or lawsuit filed against you or your organization, or you think a claim is going to be made, do not hesitate to contact us to evaluate the possibility of, and extent to which, insurance coverage exists to help you.
Evan S. Schwartz
Founder of Schwartz, Conroy & Hack