What if your business isn’t as protected as you think? Since the #MeToo movement took off in 2017, sexual abuse claims have surged across industries, with many organizations facing lawsuits and massive settlements. Is your current liability coverage enough? Learn how evolving risks demand a new approach to SAM coverage.

In October 2017, actress Alyssa Milano tweeted a simple two-word phrase that would take the world by storm and forever change the way society views and litigates sexual assault claims. While the #MeToo hashtag was initially established in 2006 by another sexual assault survivor, Milano’s series of tweets, directed at film producer Harvey Weinstein, brought a tsunami of attention to the movement.

In the eight years since Milano’s tweet, the MeToo movement has impacted nearly every corner of American society. Weinstein was eventually sentenced to prison for his sex crimes, as were other celebrities and notable figures. Many media, business, and political leaders were also forced to step down from their positions.¹

The movement also changed how the country views sexual abuse claims. Today, sexual assault and molestation victims have more support and protection as they bring their claims to light. Many states have also extended their statute of limitations to give victims more time to file a claim.

The MeToo movement and subsequent societal climate shift regarding sexual assault claims is undoubtedly a positive change for sexual abuse victims. All victims should have a supportive and protective environment to seek justice.

However, there is also no doubt that businesses, educational institutions, and other organizations now face new levels of risk for sexual abuse and molestation (SAM) exposure. In the past, a general liability policy may have been sufficient protection against SAM risks. In today’s climate, that may not be the case. New standalone SAM policies may provide more adequate and appropriate protection for organizations and sexual abuse victims.

TRENDS IN SEXUAL ABUSE AND MOLESTATION COVERAGE

In 2016, a former gymnast accused Michigan State sports doctor Larry Nassar of sexual abuse. Nassar worked with Michigan State athletes but was also a team doctor for USA Gymnastics. Over the following months, more than 200 gymnasts made similar accusations against Nassar. In 2018, Nassar was tried for sex crimes and sentenced to up to 175 years in prison.²

USA Gymnastics eventually reached a $380 million settlement with Nassar’s victims.² For Michigan State (MSU), the path to a settlement was more difficult. The university reached a $500 million settlement with victims. MSU had held the same general liability company with the same carrier for over 20 years. However, the carrier refused to cover claims related to the Nassar settlement. Eventually, Michigan State lost its sexual abuse coverage, filed a lawsuit against more than a dozen insurers, and issued bonds to self-pay the settlement amount.³

While the Nassar scandal may be the most notable of recent sex abuse cases in recent years, it’s not the only one. Sexual abuse and molestation claims are made regularly in the education space.^6,7 A recent sampling includes:

• In California, the San Diego Diocese filed for bankruptcy in 2024. The church faced over 400 sex abuse claims after California retroactively extended its statute of limitations for child sex abuse cases.⁴
• A high school district in Northern California agreed to a $17.5 million settlement with four former students for sexual abuse they endured at the hands of the school’s former tennis coach, who is now serving a 255-year sentence.⁵
• Two students (ages 14 and 13) in an after-school care program consensually participated in sexual activities with each other in the back of a classroom. The program settled for $720,000 because an employee in the room failed to provide oversight.
• A youth sports organization settled for $750,000 after a coach used their influence to have sexual interactions with players.
• A school district settled for $350,000 in a case in which two minor students left a designated lunch area to engage in sexual activities in a bathroom.
• A school district is facing pending litigation after an older male minor sexually abused a younger female minor six times over three months on a school bus. The plaintiff’s initial demand is $100 million.

Such claims make it clear why schools in the K-12 space are especially vulnerable to SAM exposure due to the numerous points of contact that district teachers, coaches, bus drivers, and others have with students. The K-12 space has seen an uptick in claims and settlements of more than $1 million. According to research from United Educators, there were 37 settlements of $1 million or more in 2021, 69 such settlements in 2022, and 71 in 2023. In 2023, settlements of $1 million or more totaled a staggering $651 million.⁸

Schools aren’t the only organizations at risk. Any business or institution in which employees interact one-on-one with a customer or other third party has some level of SAM exposure. This includes gyms, spas, hotels, non-profits, and even some types of healthcare and mental health practice settings.

For example, a well-known nationwide wellness franchise recently agreed to a $1 million settlement after a massage therapist assaulted two clients.⁹ While such claims may not always receive widespread attention, they are an unfortunate reality in a wide range of service-based businesses. Organizations must acknowledge the risk to protect themselves adequately.

STATE LEGISLATION EXPANDS CLAIM WINDOW

New legislation in 25 states has also fueled an uptick in sex abuse and molestation claims. As a by-product of the MeToo movement, many states reviewed their statute of limitation laws on both criminal and civil sexual assault claims.¹⁰

For example, California passed Assembly Bill 2777, also known as the Sexual Abuse and Cover-Up Accountability Act. This law extended the statute of limitations for sexual abuse civil claims from two years to 10 years. More significantly, the legislation applied retroactively, essentially reinstituting a window for abuses in the past ten years.¹¹ This change played a significant role in the hundreds of sex abuse claims that led to the bankruptcy of the San Diego Diocese.

GENERAL LIABILITY POLICIES MAY NOT BE SUFFICIENT

There was a time when a general liability policy could be sufficient to protect against the risk of sexual abuse and molestation. That time has passed, especially for organizations in high-risk fields like education, health and fitness, and hospitality.

Many general liability policies offer low coverage limits that aren’t sufficient for a high-dollar sexual abuse claim. Others may dispute their responsibility to cover after the fact, which was the case in the Michigan State litigation over Larry Nassar. And yet others are no longer writing the coverage at all, and brokers must seek alternative options to address the exposure. Some carriers have created standalone sexual abuse and molestation policies to fill the market need for greater protection. These policies often have higher limits, sometimes up to $15 million. They also usually provide ancillary services, such as reputation management and consultation, to help policyholders implement best practices to reduce the risk of sexual abuse in the organization.

For example, some carriers provide:

• Policy models that help organizations implement safeguards
• Discounted background check services
• Screening and selection toolkits and consultation services
• Employee abuse awareness training
• Response and reputation protection toolkits
• Onsite expert response consultations

Standalone policies provide not only greater coverage limits and protection but also enhanced services that work to minimize the risk and the potential fallout of an incident. Given the growth in sexual abuse claims and settlement amounts, retail insurance agents should consider reviewing SAM coverage options with clients and prospects. Agents can also provide superior service and protection by looking at standalone policies with more robust coverage limits.

BOTTOM LINE

It’s an unfortunate reality that sexual abuse and molestation are real and prevalent risks, especially in industries that work withchildren or have one-on-one experiences between employees and customers. Organizations in these industries face significant threats. The damages for a sexual abuse claim could be catastrophic for a school, non-profit, sports league, or health and wellness business.

General liability policies may have adequately addressed these risks in the past, but that is no longer the case for many organizations. Agents can best protect their clients by examining their current SAM coverage and considering whether a standalone policy may be more appropriate.

An experienced and knowledgeable broker can help agents find the right fit for each risk. Contact your CRC producer today to learn more about standalone sexual abuse and molestation coverage.

CONTRIBUTORS

• Elizabeth Gibbons is a Vice President and Broker. She has been a part of the CRC’s San Francisco Financial Services team since 2015.
• Michelle Levine is a Senior Vice President and has been a part of the CRC’s San Francisco Financial Services team since 2008.

END NOTES

1. The #MeToo Movement: Investigating the Lasting International Impacts, Harvard International Review, January 31, 2024. https://hir.harvard.edu/metoo-movement-international/
2. USA Gymnastics, USOPC reach $380M settlement with victims, AP, December 31, 2021. https://apnews.com/article/sports-2020-tokyoolympics-sexual-abuse-gymnastics-larry-nassar-40c88c269a8fedf28b5fada59b9079ef
3. Michigan State loses sexual misconduct coverage after cutting ties with insurer, Higher Ed Dive, March 4, 2019. https://www.highereddive.com/news/michigan-state-loses-sexual-misconduct-coverage-after-cutting-ties-with-ins/549700/
4. San Diego Diocese files for bankruptcy after 457 sex abuse claims, Reuters, June 18, 2024. https://www.reuters.com/world/us/san-diegodiocese-files-bankruptcy-after-457-sex-abuse-claims-2024-06-18/
5. Marin school district to pay $17.5M in sexual abuse lawsuit, The San Francisco Standard, December 28, 2024. https://sfstandard.com/2024/12/27/tamalpais-union-tennis-coach-sexual-abuse-settlement/
6. Former Tipton County teacher sentenced to 25 years in prison for child sex crimes, Fox 13, December 20, 2024. https://www.fox13memphis.com/news/former-tipton-county-teacher-sentenced-to-25-years-in-prison-for-child-sex-crimes/article_ee7bd8ec-bf15-11ef-9361-87e8d57b5a91.html
7. Long Branch schools sued by two who claim they were sexually abused by former teachers, app, January 13, 2025. https://www.app.com/story/news/local/courts/2025/01/13/long-branch-school-gustavo-barrientos-lawsuits/77581306007/
8. Get an Education on School Liability and Property Risks, Insurance Journal, June 3, 2024. https://www.insurancejournal.com/magazines/mag-features/2024/06/03/777417.htm
9. Houston-area massage parlor agrees to pay $1 million following sexual assault allegations, ABC 13, October 19, 2023. https://abc13.com/massage-envy-sexual-assault-incident-jose-franco-charged-1-million-settlement-allegations/13942395/
10. 2019 SOL Tracker, ChildUSA, 2020. https://childusa.org/2019sol/
11. California’s Latest Legal Challenge Reduces a Significant Barrier to Suing Rapists, Ms., February 23, 2023. https://msmagazine.com/2023/02/23/california-law-rape-sexual-assault-statute-of-limitations/
12. MeToo Movement, Media Kit. https://metoomvmt.org/stay-informed/media-kit/