Insurance claim disputes rising as accused abusers seek coverage for sex assault claims
While defamation lawsuits relating to allegations of sexual assault are still filed, the look-back windows for time-barred claims have created ambiguous areas of coverage for some insured.
As look-back windows continue to allow lawsuits filed against alleged abusers, more accused are turning to insurance to cover the cost of ongoing litigation.
“The extension of the statute of limitations for sexual assault claims will not only result in more people coming forward, but more tapping their insurance companies for coverage of these claims,” said insurance recovery lawyer Jeffrey Schulman, a managing partner at Pasich LLP.
Schulman, who has represented Bill Cosby, Harvey Weinstein and others in claim disputes, says he expects this trend to continue.
“Sexual assault is not typically a covered peril but is also not always excluded,” he said.
Before the Child Victim Act and the Adult Survivors Act, time-barred allegations of sexual assault were often litigated as outright defamation lawsuits.
“Our representation of Bill Cosby involved coverage for public allegations made by his accusers, responsive statements made calling into veracity what was being said, and as a result there were defamation lawsuits filed against him,” Schulman stated.
But insurance didn’t want to cover the claim.
“[Cosby’s] policies covered personal injury including allegations of defamation,” Schulman explained. “So he had that coverage available to him, and the dispute we had went all the way up to the Supreme Court of Pennsylvania to determine if the underlying actions stemmed from defamation or sexual misconduct. The court found AIG had a duty to defend.”
“As a general matter insurance policies are fluid,” he added. “Insurers end up covering a risk that perhaps they thought they didn’t need to cover, or disagree they should cover.”
While defamation lawsuits relating to allegations of sexual assault are still filed, the look-back windows for time-barred claims have created ambiguous areas of coverage for some insured.
Under liability coverage, insurance companies have two obligations, the duty to defend the insured, and the duty to indemnify. If the language of the policy is ambiguous, the claim is resolved in favor of coverage.
Given the prevalence of these lawsuits and the corresponding uptick in coverage claims for sexual abuse allegations, Schulman says he’s seeing an uptick in coverage disputes surrounding these claims.
In the future, Schulman said he expects to begin seeing more explicit language barring this kind of coverage.
“One could generally expect to see in the future some change to the wording of that coverage,” he said. “I think we are starting to see more prevalent use of sexual misconduct exclusions and attempts to broaden the scope of that exclusion.”
But, he added, it’s too soon to tell.
“I think the jury is still out on where this goes and how it morphs, because we’re very much in it,” Schulman said.