New York’s Child Victims Act: Why Some Organizations Have No Insurance for These Claims
In February 2019, the New York State Legislature passed and the governor signed the Child Victims Act. The law’s purpose is to permit people who suffered sexual abuse as children to obtain compensation. One section temporarily eliminated the statute of limitations for these claims.
Between Aug. 14, 2019, and Aug. 14, 2020, lawsuits alleging abuse can be filed no matter how long ago it happened. Organizations facing these claims expect their commercial general liability insurance to cover them. “Occurrence-based” CGL insurance policies cover injuries that occur during the policy period. For example, if the abuse is alleged to have occurred in 1972, it is the policy in effect in 1972 that provides the coverage. For example, if the abuse is alleged to have occurred in 1972, it is the policy in effect in 1972 that provides the coverage. If the company that issued the policy is still in business or has been acquired by another insurer, the organization can make the claim.
However, Big I NY has learned of at least three public school districts that have a different situation. The insurers that provided their coverage at the time of the abuses have gone out of business. The courts liquidated these insurers in 2016 and 2017 because they were out of money. New York has a guaranty fund to pay claims made against insolvent insurers. However, state law prohibits that fund from paying any claims against an insurer after it has been liquidated. Therefore, under current law, these school districts have NO insurance against Child Victims Act claims. The State Legislature and governor would have to change the law in order for the guaranty fund to cover them. An agency that has a client in this situation should send them a written notice. The notice should:
- Inform the client that the insurer was not notified of the claim.
- Provide the insurer’s name, policy number, and effective dates.
- State that the agency is unable to notify the insurer.
- Advise the client to contact the New York State Department of Financial Services to determine if another insurer has assumed that insurer’s liabilities.
See the Aug. 2019 issue of The E&O Report for more.
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