Sexual Abuse & Molestation (SAM) Insurance

What is sexual abuse and molestation (SAM) insurance?

Sexual Abuse and Molestation Insurance provides coverage for organizations against claims arising from alleged sexual misconduct or molestation by an employee or other representative of the organization. Given the sensitive nature of such allegations, this insurance is crucial to help shield organizations from potential legal, financial, and reputational damages.

What does SAM insurance cover?

Sexual Abuse and Molestation Insurance typically covers:

1. Defense Costs: The costs associated with defending against allegations, whether they proceed to court or are settled outside of it.
2. Settlements: Financial settlements that might arise from claims related to abuse or molestation.
3. Other Court-related Expenses: This could include judgments, legal fees, and other related costs.
4. Medical Expenses: Some policies might offer coverage for the medical expenses of the victim.

What is excluded?

While specifics can vary by policy, exclusions often include:

1. Known Acts: If the institution was aware of the misconduct at the time the policy was purchased and did not disclose it, the claim might be excluded.
2. Intentional Acts: Insurance doesn’t typically cover the deliberate acts of the individual perpetrator, although it might cover the organization’s liability arising from the act.
3. Contractual Liabilities: Liabilities that arise out of a contract might be excluded unless covered under another policy provision.

How much is sexual abuse and molestation insurance?

The cost of SAM insurance varies based on several factors:

1. Type and Size of the Organization: Larger organizations with more employees might face higher premiums.
2. Coverage Limits: Higher limits of liability will typically result in higher premiums.
3. Deductible Amount: Policies with higher deductibles may have lower premiums.
4. Location and Jurisdiction: Some regions might have higher claim frequencies or higher potential settlement amounts, affecting the premium.
5. Previous Claims History: Organizations with a history of claims might face higher premiums.

It’s essential to get quotes from multiple insurers to understand the potential costs specific to your organization. Homewood Insurance Group typically does this as part of our service, comparing coverage and prices to find the best suited policy for you at the best price.

Doesn’t general liability insurance cover sexual abuse claims?

Yes, General Liability insurance usually contains SAM coverage, however sub-limits are often inadequate. While some carriers will allow sub-limits up to $1,000,000 per incident and $1,000,000 aggregate, many SAM sub-limits are $100,000 per claim and $300,000 aggregate or even less. Defense costs for a sexual abuse claim will quickly eat up most of the $100,000 leaving very little to settle any successful claim against you.

For this reason, any organization that provides services for vulnerable members of the public, including educational institutions are advised to ensure they have realistic insurance coverage for sexual abuse and molestation claims. If you cannot get adequate sub-limits on your professional liability policy, then stand-alone SAM insurance is advisable.

Circumstances Where Carriers May Refuse SAM Coverage

Insurance carriers underwriting Sexual Abuse and Molestation (SAM) or Sexual Misconduct Liability (SML) coverage in healthcare and related fields prioritize risk mitigation. Refusal or outright exclusion of coverage often stems from perceived uncontrollable exposures or failure to meet baseline underwriting standards. Based on industry practices, here are key circumstances that can lead to denial:

• Absence of Robust Abuse Prevention Protocols: Carriers typically require a comprehensive abuse prevention plan, including written policies on zero tolerance, employee/volunteer screening (e.g., background checks), mandatory training, operational guidelines for interactions with vulnerable individuals, and clear reporting procedures for incidents. Without these, coverage is often denied as it signals inadequate risk management.
• High-Risk or Excluded Business Classes: Certain operations are deemed too risky or are explicitly excluded by many carriers. Examples include foster care services, adoption agencies, foster families, gig-economy platforms (e.g., ride-sharing or home-sharing involving vulnerable clients), and dating services. In healthcare, facilities with heavy pediatric exposure or those handling trafficking-related allegations may face outright exclusions or removal of coverage.
• Prior Claims History or Nonrenewal Trends: Organizations with a history of SAM claims, especially unresolved or frequent allegations, are often nonrenewed. Market hardening—driven by rising settlements and media scrutiny—leads carriers to limit or drop coverage for entities seen as high-loss potentials, particularly in social services or mental health settings.
• Jurisdictional or Regulatory Issues: Operations in states with extended statutes of limitations for abuse claims (e.g., revival windows for old allegations) or high-litigation environments may prompt refusals, as these increase potential payout severity.
• Inadequate Application Details: Underwriters may deny if renewal applications lack clear, complete information on operations, especially for nonprofits or healthcare providers unfamiliar to the carrier. This includes failing to demonstrate compliance with state laws on mandatory reporting.

In medical contexts, carriers are increasingly cautious with policies covering young or vulnerable patients, sometimes reducing sublimits to as low as $100,000 or requiring separate excess policies.