As you are probably aware from news reports and attorney advertisements, a new law takes effect in New York on August 14, 2019 that will likely result in the filing of thousands, or perhaps tens of thousands, of lawsuits by victims of child sexual abuse.  As discussed below, the handling of these claims may be challenging to insurance agents and brokers and they should be handled with extreme care.

On February 14, 2019, Gov. Andrew Cuomo signed into law the New York Child Victims Act ("CVA").  The CVA: (1) extends New York's statute of limitations to allow for criminal charges against sexual abusers of children until their victims turn 28 for felony cases, up from the previous age of 23; (2) allow victims to file civil action against their abusers and the institutions that enabled the abusers; and (3) opens up a one-year, one-time-only period to allow ALL victims to seek civil action, regardless of how long ago the abuse occurred. The window for these claims opens August 14, 2019 and closes August 14, 2020.

New York Courts and attorneys are expecting a huge influx of lawsuits to be filed during the window of time provided for in the CVA. As a result, a victim of child sexual abuse fifty years ago, or even longer, could bring a civil action against their abuser and the employer or supervisor of the abuser at the time of the abuse.

What does that mean for insurance agents and brokers? Agents and brokers, especially those who have procured coverage for not-for-profit children organizations, camps, sports-related entities, educational entities, religious institutions, or any other entities dealing with children directly or indirectly, need to be aware that claims are coming and should be handled carefully.

The following are a few guidelines for your agency or brokerage to keep in mind when handling the incoming claims:

• Read the complaints carefully, since there could be claims from multiple coverage periods contained in a single complaint.  Send notice to insurers for all possible coverage periods, both for policies with claims-made and occurrence-based coverage;
  

• Do not limit your notice to General Liability insurers; include Directors & Officers coverage, Employment Practices Liability coverage, and any other liability policy that may potentially provide coverage;
  
  
• Do not make coverage decisions.  Although a policy may have an Abuse or Molestation Exclusion, or excludes intentional acts, there may be coverage for negligent supervision, negligent infliction of emotional distress, or other similar claims.  Send the notice to the insurer and let it make the coverage decision; 
  
  
• After you receive notice from your customer, make sure that customer's files are not destroyed as part of your regular document destruction procedures.    Although your procedure maybe to destroy files that are more than 7 years old, or some other period of time, once you receive notice, make sure that customer's files are maintained until all coverage issues are fully resolved;
  
  
•  In the event that your agency/brokerage no longer maintains records that identify your customer's policies, for example polices issued in the 1970's or 1980's, you should send a certified letter to your client explaining that after a diligent search, you have been unable to identify their policies and, therefore, you have not provided notice to the insurers.  Advise the customers that if they have any information that identifies the name of the insurance company, the policy number, or the effective date of the policies, they should immediately forward the information to you so that notice can be provided to the insurer(s).
  
  
• If your records reveal that any of the insurers are no longer in business and, therefore, you are unable to notify the insurer, you should advise your customer in writing that the insurer was not notified.   This should be done by sending a certified letter to your customer, identifying the insurer, the policy number, and effective date of the policy(ies), advising that you are unable to notify the insurer and that they should contact the New York State Department of Financial Services to determine whether there is a successor to the original insurance company.
  
  

In addition to the large number of lawsuits that it is anticipated will be brought by the victims of sexual abuse, there will also likely be many lawsuits that will arise with regard to coverage for the new CVA claims.  By carefully handling reports of claims that it receives, the prudent insurance agency or brokerage will not only help protect its insureds, but it will also help reduce the likelihood of an E&O claim or lawsuit in connection with those matters.

Submitted by:

Stephen C. Cunningham, Esq.
Michael E. Kremen, Esq.
Keidel, Weldon & Cunningham, LLP

Keidel, Weldon & Cunningham, LLP concentrates its practice in the defense of insurance agents and broker's errors and omissions claims and litigation, errors and omissions loss control counsel and education, insurance coverage analysis and litigation and insurance regulatory matters. Please direct any comments or questions to James C. Keidel, Esq. by mail to the main office of Keidel, Weldon & Cunningham, LLP, at 925 Westchester Avenue, Suite 400, White Plains, NY 10604, telephone at (914) 948-7000 or e-mail at jkeidel@kwcllp.com. The law firm also maintains offices in Syracuse, New York; New York City, New York; Wilton, Connecticut; Fair Lawn, New Jersey; Warwick, Rhode Island, Philadelphia, Pennsylvania, Williston, Vermont and Naples, Florida.