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Learn about sexual abuse and molestation insurance including coverage and costs. Even if an accusation of abuse or molestation is false, it can cost and organization a lot of money to defend – and do a large amount of reputational damage in the process.

Sexual Abuse And Molestation Insurance

Do you run an organization that works closely with youth, seniors or disabled clients? If the answer is yes, your organization should be having insurance coverage against sexual abuse and molestation.
Organizations such as churches, school camps, daycares, even charities are liable to claims of abuse (abuse could mean different types of allegations like mental abuse, physical abuse, humiliation & more). Such accusations can be devastating to any organization in terms of finance and reputation, regardless of whether any actual abuse has occurred.
If an accusation reaches a stage where the organization is required to defend itself in court, the cost of litigation so can be debilitating. An expensive legal battle can ultimately lead to the organization being forced to close its doors. Even some of the strongest organizations might survive a dragged out legal battle without the right coverage.

Who Needs Abuse Or Molestation Insurance?

Any organization that provides youth service, services to developmentally disabled individuals of any age, or any senior citizens should consider sexual abuse and molestation insurance. This coverage is to protect an organization from allegations of sexual abuse. Some people think this policy deals with claims of sexual harassment, but that is better covered under other types of management liability insurance.

On top of legal woes, an organization also has to struggle with the negative publicity that entails. Managing a public relations crisis can become a nightmare. Business operations and profits will take a negative impact, without financial support it becomes a vicious cycle and will quickly send your organization into disarray.

Some small organizations, especially those that do not have any employees, may believe that abuse and molestation insurance is pointless. The bad news is abuse cases between two individuals usually ends up in a “he said, she said” situation. Without any witnesses, often it boils down to the word of the accused against that of the ‘victim’.

That is why it is essential that every organization that provides assistance or services to youth, seniors or disabled individuals be protected with sexual abuse and molestation insurance.

Undersatinding Sexual Abuse And Molestation Insurance

While the rise of sexual abuse and misconduct incidents in today’s world, it is fortunate that coverage for abuse is readily obtainable in the open insurance market. Before you decide on what insurance policy to get, make sure that you fully understand the sexual abuse and molestation insurance policy coverages such as:

  • Whether the coverage is for both sexual and physical abuse;
  • Are there sufficient limits in both occurrence and aggregate;
  • Is there an aggregate limit that is at least two times the occurrence limit;
  • Is there a bodily injury deductible or self-insured retention (SIR);
  • What are the exclusions from abuse & molestation coverage?

If the above legal terms sound unfamiliar to you, then it is advisable for you to hire a professional insurance agent to assist you. You might be thinking: How should I go about getting the right insurance coverage? Well, this is where the importance of a truly competent insurance agent or broker comes into play.

An agent with the experience, understanding of coverage, market knowledge is instrumental, even more so if he or she has handled similar cases in the past. What you truly need is a someone who can lead you through the labyrinth of forms, limits, retention issues, carriers, quality and reputation of claim handling.

While it is possible to do the paperwork on your own, however, doing so can be perplexing and time-consuming if you are inexperienced. Sexual abuse and molestation insurance is a relatively new form of protection. It would be a worthwhile investment to go with a specialized insurance agent instead of winging it by yourself.

How Much Does Sexual Abuse And Molestation Insurance Cost?

The short answer is that abuse coverage is not as costly as you may think. If you consider the consequences that entail in the event of a sexual misconduct accusation, the costs will look unequivocally inexpensive. But it will depend on type, size and location of the organization. Also see employment practices liability insurance for more information.

People often believe the only difference between insurance policies is the price – but this is not true – particularly with specialized coverages like this. For example:

  • Some policies have very strict rules for the definition of abuse, and others have a much broader definition.
  • Some policies can restrict the coverage to only those claims for abuse of a ‘sexual nature’, while others polcies will include mental and emotional distress.

Sexual Abuse And Molestation Court Cases


Kratzer and Barrett were both attendees at a sexual harassment seminar hosted by their union and employer. Both Kratzer and Barrett had, through separate travel arrangements, arrived the day before the seminar was to begin and both were staying at the same hotel. Kratzer, after a session of steady drinking at a local restaurant, went to Barrett’s hotel room and made several offensive advances to Barrett. Kratzer’s evening long attempt to secure intimate relations included touching Barrett without permission, refusing to let Barrett out of her room and lewd solicitations.

Barrett was unable to attend the seminar sessions the next morning and she reported Kratzer’s actions to a company supervisor. Both employers attended the rest of the seminar without further incident. The employer began investigating Kratzer’s actions and, because of the investigation, Kratzer resigned.

Barrett claimed that the incident caused her serious emotional distress. She began seeing a psychologist and she also resigned from her job. Barrett was later diagnosed as suffering from post traumatic stress disorder. She also claimed to have experienced thoughts of suicide. Barrett filed a claim for damages against Kratzer and State Farm, Kratzer’s homeowner insurer.

State Farm began investigating the claim under a reservation of rights. After discovering the details of the incident, State Farm denied the claim and filed for a declaratory judgment. It requested this judgment, asserting that no bodily injury or accident occurred. Further, their policy excluded intentional acts, therefore they owed neither a defense nor coverage. The lower court agreed and granted their motion. Kratzer and Barrett appealed arguing that, while Kratzer’s actions were intended, the injuries were not, so the claim for damages should be eligible for coverage.

The higher court reviewed the arguments along with the homeowner policy definitions for bodily injury and occurrence. In its opinion, no occurrence took place which would trigger coverage. It also held the position that intentional harm is implicit in the act of sexual harassment. Finally the court also believed that the claim involved “business pursuits” which would have also barred recovery. The lower court’s decision in favor of State Farm was affirmed.

State Farm Fire and Casualty Company, Respondent v. Tuamafa Barrett et al., Appellants. SCCt. No. 3151 Filed April 10, 2000. Affirmed. CCH 2000 Fire and Casualty Cases, Paragraph 6689.


RJC Realty Holding Corporation (RJC) obtained liability coverage for its business, “Pure Maximus Spa/Salon,” from Republic Franklin Insurance Company (Republic). Under the policy, Republic agreed to indemnify and defend RJC against claims for “bodily injury” caused by an “occurrence” as defined in the policy. “Occurrence” was defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” This coverage was subject to two relevant exclusions. Coverage did not apply to ” ‘[b]odily injury’ . . . expected or intended from the standpoint of the insured” or to ” ‘[b]odily injury’ . . . arising out of . . . [b]ody massage other than facial massage.”

employed. Their complaint alleged that there was improper sexual contact during Marie’s massage. When RJC notified Republic of the suit, Republic disclaimed coverage, citing both of the exclusions noted above. RJC sued Republic, seeking a declaratory judgment that it was obligated to defend and indemnify RJC in the Harrison action. The New York Supreme Court (the lower court) ruled in RJC’s favor, stating that neither of the exclusions applied. Republic appealed. The Appellate Division reversed, holding that the “expected or intended” exclusion applied. RJC filed a motion for leave to appeal.

In evaluating the case, the Court of Appeals of New York stated, “In deciding whether a loss is the result of an accident, it must be determined, from the point of view of the insured, whether the loss was unexpected, unusual and unforeseen.” In this case, because the insured was the employer of the alleged perpetrator, it was first necessary to decide whether the masseur’s expectation and intention in committing the assault should be attributed to the employer, RJC. The court found the actions were not attributable to RJC. Assuming the allegations were true, the court reasoned that the masseur departed from his duties for solely personal motives unrelated to the furtherance of RJC’s business. Because the actions were not attributable to RJC as an employer, they were not expected or intended by RJC, and were an “accident” within the meaning of the policy.

The court briefly evaluated the question of whether the “bodily injury” arose out of a “body massage” and was excluded. The court read the policy language to include only a bruise or similar injury inflicted on the customer by the massage itself. As a result, the “body massage” exclusion did not apply.

The order of the Appellate Division in favor of Republic was reversed and the Supreme Court judgment in favor of RJC reinstated.

RJC Realty Holding v. Republic Franklin-Court of Appeals of New York-April 1, 2004-808 North Eastern Reporter 2d 1263

Sexual Abuse And Molestation Insurance - The Bottom Line

We hope this article on sexual abuse and molestation insurance was informative. Hire an expert to help you choose and weigh the benefits of buying the right abuse coverage. Invest in a good policy so that your organization is adequately covered against abuse claims. The future of your organization lies in its ability to overcome adversities. It’s a responsibility that each organization should take control of.

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