ABUSE LIABILITY INSURANCE

AMC INSURANCE PTY LTD

ABUSE LIABILITY INSURANCE

The availability of abuse liability insurance within Australia is very limited. While some insurers are capable of offering limited extensions for cover under a packaged product (e.g. Professional Indemnity, Public Liability and Abuse Liability) to certain industry segments, other businesses may require access to standalone cover.

If you require assistance with this cover as a standalone product then we can engage with Australian underwriters on your behalf to secure quotes from Beazley (London) via their Safeguard product being offered to the Australian market.

At AMC Insurance we are dedicated brokers who will guide you through the whole insurance process, providing clear and friendly advice every step of the way.

WHAT DOES ABUSE LIABILITY INSURANCE COVER MY BUSINESS FOR?

In broad terms this type of insurance is designed to protect your business from claims arising from allegations of sexual abuse or molestation.

To understand the full cover it is important to review the policy wording and schedule of insurance quoted to your business. As a guide, we look to what is called the primary insuring clause and consider how it applies:

“To pay loss resulting from any claim first made against any insured by or on behalf of a victim during the policy period for a wrongful act and reported in accordance with the Claim Requirements and Information section.”

All of the bold/underlined words above a further defined within the policy wording, but will get into too much detail to discuss here.

In short, the intention of these definitions are:

to pay loss (includes judgements, awards, settlement fees, legal defence costs, etc.)resulting from a claim (often a written demand for a monetary demand, however, the definition extends further in the policy wording)

against an insured (which is the insured entity(ies) noted on the insurance schedule only)

by or on behalf of a victim (means any individual who alleges that they were the direct subject of an act of sexual abuse and molestation)

during the policy period (noted on the schedule, but bearing in mind that this policy operates on a claims made and notified basis)

for a wrongful act (meaning any act of sexual abuse and molestation first committed by an insured person on or after the retroactive date against any one victim whilst performing duties in relation to the insured organisation’s business)

It is important to note that the policy contains limitations via exclusions to limit the extent of cover and definitions in some instances.

HOW DOES THIS ABUSE LIABILITY INSURANCE PROTECT MY BUSINESS

For any business working with children and/or vulnerable people or that have an exposure to these individuals there likely exists legal obligations and framework that you must adhere to.

Most businesses will ensure that they are compliant and make every effort to undertake appropriate Working with Children checks and Police Checks, amongst other vetting processes.

Unfortunately, no matter how hard some businesses might work to protect their customers and the community there is risk that an employee may entirely breach the trust owed to these individuals and commit an act that falls within the policy coverage.

The intention of the insurance policy is to respond to the subsequent legal claim and investigations that arise from the individual against the perpetrator or your business. Without the protection of the insurance policy most businesses would be crippled by the legal costs and damages that might be payable.

AREN’T THERE ETHICAL ISSUES WITH PROVIDING THIS TYPE OF INSURANCE GIVEN THE GRIEVOUS NATURE OF THE ACTS?

In short, yes.

It is due to the nature of these criminal acts that the vast majority of insurance companies within Australia will not be involved in providing cover (i.e. in some cases there own public shareholders might be aggrieved if they knew the type of insurance cover being provided).

As an insurance broker it is also challenging to consider being involved in offering access to this type of product to businesses. However, we have come to take the position that businesses that have met all their obligations commercially and at law to protect children and vulnerable individuals from risk and harm should be afforded protection by insurance due to the criminal acts of their employees who break the trust that should otherwise have been provided.

There are two other important factors to take into consideration too:

It may be that an allegation is made of sexual abuse or molestation against an innocent individual and as such they should be afforded the protection of the insurance

That any individual that had actually conducted these criminal acts will not be afforded cover by the insurance (i.e. as determined through the courts)

HOW MUCH WILL ABUSE LIABILITY INSURANCE COST?

For all customers the cost of the insurance policy is going to be completely dependent on their individual risk exposure, industry segment and policy limit required.

At this stage we cannot offerany specific indications of costs as a guide. However, are happy to provide an obligation free quote upon receipt of the relevant proposal form, addendum and supporting risk management information.

WHAT INFORMATION IS NEEDED TO OBTAIN A ABUSE LIABILITY INSURANCE QUOTE?

We work to negotiate quotes based on the information provided by you from a proposal form and addendums.

The forms will go into detailed risk information that must be provided in order to obtain a quote, including:

Full contact information of the business
Financial Information of the Business (detailed in the proposal form), but can be supplied through audited income statements, balance sheets, cash flow statements, etc.)
Details of any past similar coverage (if applicable)
Industry segment (e.g. education, healthcare, religious, etc.)
Details of staff numbers and client contact numbers, locations, etc.
Information on the types of clients that are engaging your business
Loss prevention and risk management processes
Training details
Policies and procedure overview
Monitoring and supervision processes
Incident response and reporting steps
Loss history
Claims handling process

In most situations confirmation of the risk information is adequate and we may not require copies of all these supporting documents.

WHAT BENEFIT IS AN INSURANCE BROKER TO MY BUSINESS?

Because of the high risk nature of the insurance required it is most likely that an insurer based within Lloyd’s of London will be required to cover your exposure. As a broker we access Lloyd’s by engaging with local Australian Underwriting Agencies.

If it sounds like working with AMC Insurance may be right for your business, please reach out to us per our contact details on this page.