Abuse charges jeopardize Catholic churches’ insurance coverage

The Catholic diocese in the US is facing insurance questions after carriers protest having to provide coverage for abuse claims.

Insurance News


The Catholic diocese in the US is facing a potential lack of coverage as insurers of various churches question their obligation to cover claims of victims of clergy abuse.

According to an Associated Press report, criminal charges allege the Archdiocese of St. Paul and Minnesota knew that one of its priests was abusing children for decades and did not step in to prevent the problem. That may qualify as an intentional or criminal act – something most insurance policies don’t cover. This is particularly true for acts that are “expected.”

A criminal conviction could not only leave the archdiocese on the hook for settlement payments, it could affect the archdiocese’s insurance coverage for existing and future sex abuse claims, said University of Minnesota law professor Christopher Soper.

“The charges allege that the archdiocese knew about the abuse and didn’t protect the child,” Soper told Minnesota Public Radio. “That would likely preclude insurance coverage for the charged conduct because most insurance policies don’t cover intentional acts or criminal acts.”

Roughly 100 claims have been filed against the archdiocese by victims seeking compensation for abuse by the former priest, with some going back several decades. The church itself has just $27 million in assets and has filed bankruptcy, citing the inability to compensate victims, so gaining insurance coverage is critical.

At the least, the archdiocese will have to pay fines of $18,000 for the incidents.

Insurers, however, have already denied claims or reserved the right to reject claims, and the coverage dispute is an integral part of the archdiocese’s bankruptcy proceedings.

The insurers’ concern is neither new nor unprecedented. Between 2004 and 2014, Catholic dioceses across the country incurred more than $2.7 billion in sex abuse costs, including settlements, victim therapy and legal fees. However, just 32% of those costs were covered by insurance policies.

In the St. Paul case, experts say insurers may be even more restrictive.

“The insurer may hold that information was intentionally withheld that was relevant to the writing of insurance policies, something material that impacts the risk associated with writing that policy,” said Robert Hartwig, president of the Insurance Information Institute. “That is grounds for rescission of a policy.”

Victims have until August 3 to file claims in the case.

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