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Insurance Lessons from the Boy Scouts Sex Abuse Scandal

February 20, 2020

Every boy who joins the Boy Scouts of America takes an oath promising to be trustworthy and obedient, among other things.

A trustworthy Scout tells the truth and keeps his promises. An obedient one obeys the laws of their community and nation.

But according to the 110-year-old organization’s insurance carriers, the BSA itself failed to live up to its own code of conduct by failing to alert them about sexual abuse of boys by Scout leaders and volunteers.

The BSA – which filed for bankruptcy protection a few days ago — kept records of thousands of sexual abuse and misconduct allegations. It said it did so to protect children by listing the names of people who shouldn’t have been allowed to work with them in the first place.

Its insurers, however, now argue they should not have to cover tens of millions of dollars in sex-abuse settlements and legal defense fees. The insurers say the BSA failed to do enough to protect children from sexual abuse and misconduct and that it didn’t do enough to warn parents of the risks.

Rather than get any further in the weeds here, suffice it to say that the circumstances underscore a couple of very important points for any business buying either a general liability, umbrella or employment practices liability insurance policy:

First, is the policy written on a “claims-made” form or “occurrence” form?

The claims-made form covers incidents that you report during the active policy period and occur after a policy’s start date. This form would make it impossible to collect on a claim made after the policy had expired.

The occurrence form, on the other hand, covers losses that take place during a specific coverage period, regardless of when an incident is reported. In other words, a claim made by a one-time Boy Scout today about an incident years ago would still be covered by whatever policy was in place at the time – assuming its payout limits were not exhausted.

There’s obviously an advantage in having an occurrence policy, and, yes, it would cost more. But, as any Boy Scout will attest, it’s better to be prepared.

A second important point in the same “always be prepared” vein: be sure you understand whether defense costs will “exhaust” your policy limits or are treated separately. Litigation is costly, as we all know, so you’re better off steering clear of a “defense-within-limits” policy.

CCIG is a Denver-area insurance, employee benefits and surety brokerage with clients nationwide. We do more than make sure you have the right policy. We help you manage your long-term cost of insurance with our risk and claims management expertise and a commitment to service excellence.



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