written by Zachary Warzel

Liability insurance coverage in sexual assault cases is often an impediment to recovery for the survivors and to the pursuit of legal remedies at all by their attorneys. Insurance covers fortuitous occurrences that are outside the control of the insured. To this end, policies only cover “accidents,” and typically exclude intentional acts, criminal acts, and sometimes specifically “sexual abuse” or “sexual misconduct.”

Survivors and their attorneys need to be mindful of what claims to bring, who to sue, what types of insurance the wrongdoer potentially has, how to style their claims, and what damages to allege.

This article explores the various issues surrounding whether, and in what circumstances, claims involving allegations of sexual assault are potentially covered by liability insurance, and how survivors and their attorneys can best pursue a recoverable claim for damages.

1. Liability Insurance Coverage for the Perpetrator of a Sexual Assault

Historically, courts have found that it is “contrary to public policy to insure against liability arising directly against the insured from intentional or willful wrongs, including the results and penalties of the insured’s own criminal acts.” Bohrer v. Church Mut. Ins. Co., 965 P.2d 1258, 1262 (Colo. 1998).

As a practical matter, this means there is no such thing as negligent sexual assault. Allegations of negligence by the assailant included in a complaint will not invoke the duties of the insurer to defend or indemnify under a homeowner’s or other liability policy. See Horace Mann Ins. Co. v. Peters, 948 P.2d 80, 85 (Colo. App. 1997) (the factual statements of the survivors’ complaint specifically alleged that assailant was guilty of a series of sexual assaults; no claim for negligence can, as a matter of law, be asserted).

Liability insurance policies contain many roadblocks. The typical Commercial General Liability (“CGL”) policy, under which an assailant may seek coverage for a workplace assault, contains the following language:

“Occurrence” means an accident, including continuous or repeated exposure to substantially the same general harmful conditions. Colorado courts interpret the word “accident” in liability policies to mean “an unanticipated or unusual result flowing from a commonplace cause.” Union Ins. Co. v. Hottenstein, 83 P.3d 1196, 1201 (Colo. App. 2003).Similarly, and perhaps redundant to the “occurrence” requirement, CGL policies typically include the following exclusion:

We will not provide insurance for personal injury or property damage:

a. which is either expected or intended by you;

Additionally, many liability policies contain exclusions barring coverage for liability:

b. which results from violation of a criminal law committed by, or with the knowledge or consent of any insured.

Safeco Ins. Co. of Am. v. Henri, No. 19-cv-01825-LTB-KLM, 2020 U.S. Dist. LEXIS 169275, at *13 (D. Colo. July 23, 2020).

Some policies go so far as to add a specific exclusion for sexual misconduct. For example, one policy provides:

This insurance does not apply to “bodily injury”, “property damage”, “advertising injury” or “personal injury” arising out of:

(a) The actual or threatened abuse or molestation by anyone of any person while in the care, custody or control of any insured, or

(b) The negligent:

(i) Employment;

(ii) Investigation;

(iii) Supervision;

(iv) Reporting to the proper authorities, or failure to so report; or

(v) Retention;

of a person for whom any insured is or ever was legally responsible and whose conduct would be excluded by (a) above.

Thus, liability insurance coverage for the perpetrator of a sexual assault faces myriad insurmountable problems under Colorado law, including:

· Sexual assault does not constitute an “occurrence” or “accident” under the terms of a liability policy;

· Many policies specifically exclude “intentional acts” that were meant to cause harm – intent to harm is inferred from a sexual assault;

· Many policies specifically exclude “criminal acts;”

· Some policies add “sexual abuse” or “sexual misconduct” exclusions.

In short, the individual perpetrator of a sexual assault (to the detriment of the assault survivor) will not be covered by liability insurance in Colorado. Unless the perpetrator has significant assets of his or her own, a recovery from an individual assailant is not practical and many survivors (and their attorneys) may be discouraged from pursuing civil remedies.

2. Liability Insurance Coverage for the Enabler (the “Innocent” Co-Insured)

But are there any other avenues of recovery available to the survivor? Again, it depends. Oftentimes, sexual assault or abuse occurs in the context of work, school, or some other organized setting where there is the potential for direct claims against the organization flowing from its hiring, training, supervision, and reporting obligations. Here lies the potential for liability insurance coverage.

Depending on the policy, the managing organization may face similar hurdles to obtaining liability insurance coverage to that of the direct perpetrator. As with most things legal, words matter. Conditioned upon the language of the exclusions discussed above, the managing organization may also be barred from receiving coverage. For example, intentional acts and criminal acts exclusions may state that there is no coverage for liability arising out of personal injury or property damage which is either intended or expected by “any insured,” rather than the individual insured who is seeking coverage. Courts in Colorado will enforce such language as written and preclude coverage for the managing organization. See, e.g., Chacon v. Am. Family Mut. Ins. Co., 788 P.2d 748, 752 (Colo. 1990) (affirming finding of no coverage for parents where son vandalized a school; policy language excluded property damage either expected or intended by “any insured”).

Additionally, there is some confusion in the state of Colorado’s case law regarding whether direct negligence claims filed against a managing organization that arise out of sexual misconduct by an employee or other person constitute “accidents” or “occurrences.” Generally, whether an event is accidental is viewed from the standpoint of the insured. “[I]t is the ‘knowledge and intent of the insured’ that make injuries or damages expected or intended rather than accidental.” Hoang v. Monterra Homes LLC, 129 P.3d 1028 (Colo. App. 2005) (quoting Hecla Mining Co. v. N.H. Ins. Co., 811 P.2d 1083, 1088 (Colo. 1991)); see also Greystone Constr. v. Nat’l Fire & Marine Ins. Co., 661 F.3d 1272, 1278 (10th Cir. 2011).

Typically, as applied to a managing organization, this will translate to a finding that the organization did not intend or expect the sexual assault, and thus an “occurrence” is implicated.

In Mt. States Mut. Cas. Co. v. Hauser, 221 P.3d 56, 61 (Colo. App. 2009), however, the court found that claims of negligent hiring, etc., brought against a restaurant related to an underlying sexual assault by a relative/employee did not arise out of an occurrence because the assault was intentional. But the employer’s conduct there was willful and wanton because it knew about the employee’s prior sexual misconduct and expected that it could occur again. Id. Hauser has subsequently been criticized and distinguished by a number of out-of-state decisions. See, e.g., Main St. Am. Assurance Co. v. Marble Sols., LLC, 557 F. Supp. 3d 844, 853 (W.D. Tenn. 2021); Am. Med. Response Nw., Inc. v. Ace Am. Ins. Co., 526 F. App’x 754, 756 (9th Cir. 2013).

Hauser appears to be unique, and should be limited to its particular facts, because there the employer/insureds seeking coverage were found by a jury to be liable for the employee’s actions under theories of respondeat superior and vicarious liability based on the their own willful, wanton, and reckless conduct. Also, the jury awarded damages against the insured because the owners of the business “knew full well what was potentially going to happen with [the supervisor] and the female employees and did not care.” Hauser, 221 P.3d at 58.

Attorneys representing survivors should, therefore, be careful what they ask for when filing lawsuits. An attorney may wish to avoid claims of vicarious liability (which is typically not available in any event in cases of sexual assault because the conduct is not in the “course and scope” of employment) and steer clear of alleging or seeking punitive damages against the managing organization based upon willful, wanton, or intentional conduct.

This issue aside, policies can be purchased that specifically provide coverage to a managing organization for claims arising out of sexual misconduct, so long as the organization did not directly participate in the misconduct. For example, one such policy provides:

The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to any person arising out of sexual misconduct or sexual molestation which occurs during the policy period. . . .

Church Mut. Ins. Co. v. Klein, 940 P.2d 1001, 1003 (Colo. App. 1996). Exclusions to this coverage grant provide that the insurance does not apply “to any person who personally participated in any act of sexual misconduct or sexual molestation.” Id.

3. Take Aways

Considering the above, the survivor and his or her attorneys need to be mindful of the following practical considerations when asserting claims arising out of sexual misconduct:

· Pursue the right people – If the assailant does not have appreciable assets, it will likely not make sense to bring claims against the perpetrator. There will not be any insurance coverage. A paper victory, without a means of collection, is no victory at all.

· Assert the right claims – To maximize the chances of liability insurance coverage, survivors should bring direct claims against the managing organization for negligent hiring, supervision, training, retention; and failure to report under Colorado’s mandatory reporting statute. C.R.S. § 19-3-304. These are potentially covered, depending on the wording of the operative policies.

· Avoid exclusionary allegations – Overly aggressive allegations against a managing organization may work against the goals of the survivor. Demand letters, complaints, and pleadings should avoid claims for punitive damages, willful and wanton conduct, intentional conduct, knowing conduct, etc.

The survivor’s attorney should diligently search for all potentially applicable insurance policies. Be sure to request and, if possible, receive copies of all potentially applicable policies. Where a CGL policy may not provide coverage, there may be another policy, such as a professional liability policy, that could contain more favorable language or an endorsement covering sexual misconduct related claims. Double check the declarations page’s listing of applicable policy forms and endorsements and make sure you receive copies of everything. A careful analysis of the policies may reveal a path to collection.

If all else fails – A managing organization is much more likely to have assets to spend on a case than an individual perpetrator. If your research reveals appreciable assets, the liability insurance may not be of much concern and collectability may be assured regardless. But be aware of Colorado’s charitable immunity statute, C.R.S. § 7-123-105, which may limit the recovery from a nonprofit corporation to the amount of its insurance coverage.

Zachary Warzel focuses on sexual assault cases and insurance disputes. In 2023, he was named the Insurance Lawyer of the Year by Best Lawyers in America.