05 May Do CGL and Umbrella Policies Cover Sexual Abuse, Molestation, and Misconduct?
During a recent conversation with an agent, I was asked if CGL and umbrella policies cover sexual abuse, molestation, and sexual misconduct. The agent’s contention was that, absent a specific exclusion, the policies would provide coverage. He spoke to his underwriter, and he agreed with the agent but would not put it in writing. So, is the agent correct in his thinking?
I think the first thing we have to address is what the CGL policy covers. Coverage A covers “bodily injury” and “property damage,” and Coverage B covers “personal and advertising injury.” The policy defines these three terms.
The CGL insuring agreements for both Coverage A and B state, “We will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies. (Coverage A). Coverage B responds to “personal and advertising injury.”
“Bodily injury” is defined as bodily injury, sickness or disease, including death from any of these.
“Personal and advertising injury” is defined as false arrest, detention, or imprisonment; malicious prosecution; the wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor; oral or written publication, in any manner, of material that slanders or libels a person or organization or disparages a person’s or organization’s goods, products or services; oral or written publication, in any manner, of material that violates a person’s right of privacy; the use of another’s advertising idea in your “advertisement;” or infringing upon another’s copyright, trade dress or slogan in your “advertisement.”
Sexual abuse, molestation, and sexual misconduct allegations tend to be more emotional in nature. Some states might consider emotional injury as “bodily injury”, but most do not. Injury arising out of physical contact would probably be “bodily injury”, but shock, humiliation, and emotional trauma would probably not be considered “bodily injury.”
“Personal and advertising injury” is named offense coverage. If an offense is not named in the definition, there is no coverage. Sexual abuse, molestation, and sexual misconduct are not named offenses. Neither are shock, humiliation, or emotional trauma.
If the Coverage A or B insuring agreement would respond, we must address the exclusions. Coverage A excludes expected or intended injury. The exclusion is from the standpoint of the “insured” who caused the expected or intended injury. Coverage B excludes knowing violations of another’s rights. Both would probably preclude coverage.
Umbrella policies are non-standard, so we would have to read the policy. Is the policy “following form” (follows the coverage of the underlying policy), or is it a true umbrella that would provide broader coverage? For example, the definition of “bodily injury” or “personal and advertising injury” might include shock, humiliation, or emotional trauma. Of course, we would also need to consider the policy exclusions.
If my insured were sued for sexual abuse, molestation, or sexual misconduct, I would file a claim with the CGL and umbrella carriers and let them investigate and determine coverage. It is possible that some allegation in the suit could trigger coverage, or the carrier might provide investigation and defense expenses until that is determined.
I would prefer specific coverage for sexual abuse, molestation, or sexual misconduct, either as an endorsement or a stand-alone policy. It is better to have an affirmative statement of coverage rather than rely on a company’s interpretation of the CGL or umbrella.
So, the answer to the question “Do CGL and umbrella policies cover sexual abuse, molestation, and sexual misconduct?” is maybe.