Submission Date:
Question:
We are a small, rural, association library that serves a population of under 4,500. We recently received an Abuse or Molestation Exclusion from our general liability/property insurance company. It states that the Abuse or Molestation Exclusion on our policy has been replaced with a new "Broad" Abuse or Exclusion, which applies regardless of whether the abuse or molestation occurs while in the care, custody or control of any insured. Basically, we have no coverage in the case of any abuse or molestation claim made against a staff member. Our library has 21 security cameras throughout our facility, including any room where a staff member might be alone with children. We have a strict policy where a staff member is never to be alone one-on-one with a child. We have a Child Safety Policy in place. We also have Directors and Officers insurance, Employment Practices Liability insurance, as well as Workmans Comp coverage. We've had our insurance agent look into a separate Sexual Abuse Molestation (SAM) policy but it is quite expensive. Is it necessary for libraries to purchase an additional SAM policy, if we have taken these extra precautions?
Answer:
Before answering this question, I have to point to the extraordinary care the member has put into formulating it.
Prior to considering insurance coverage as a question of budget, this member library has:
- Passed policies to promote safety;
- Taken action to monitor its environment and protect itself, its employees, and visitors from unsubstantiated claims of molestation and abuse; and
- Addressed insurance considerations head-on.
This is the exact order of operations: only once an institution has done all it can to prevent a risk of molestation or abuse, should it then consider questions of adequate insurance and budget.
That said, because it can impact the financial viability of a library, right after assurance of safety, it is critical—as this library is doing—to consider questions of adequate insurance and budget.
Why is this important?
No volunteer board member likes to consider the possibility that their library may need coverage for “Abuse and Molestation,” but there are many scenarios where even a library with the best policies and safest practices can have a credible accusation. For example:
- If a library has a room that it allows community groups to use, the library may be named in a case against the group (if the alleged incident took place at the library);
- If an employee engages in abuse without warning, but an injured party claims the library knew the employee posed a threat; or
- If the alleged incident truly didn’t happen, but the library or named employee still needs to be represented in court until it is dismissed (hopefully in the early phases of litigation).
In other words, there are many scenarios where even a library that has taken the best precautions—and which truly is not at fault in any way—can be named in costly legal proceedings. If there is no insurance coverage when that happens, the library will have to pay.[1]
Further, if innocent trustees, employees and/or volunteers are personally named in such proceedings, the library may also want to defend these people (and in some cases, may owe them a defense[2]).
All that said, as the member points out, there may be a point where coverage is so costly, a small library must decide it simply isn’t affordable.
Which brings us to the member’s question: Is deciding to go without “SAM coverage” truly an option?
There is no legal requirement to have SAM coverage. Unlike automobile insurance and some of the other types of coverage listed by the member, such coverage is not required by law (this might have something to do with its lack of affordability).
However, while not required, it is important for library trustees to remember that the bills for a claim of sexual abuse or molestation can easily be in the tens of thousands—and that’s just to get an unfounded case knocked out in the initial phases of litigation. Therefore, a library with a high degree of confidence that such a claim is highly unlikely to occur, OR, if it does occur, highly likely to be defensible, can take the following steps to be ready, without securing SAM insurance:
Step 1: Ensure that the library has a policy barring trustees, employees, or volunteers from any physical abuse of any person in connection with the library. Importantly, this policy should also state that “In the event the library determines that this policy has been broken, termination will be immediate, and the library will not indemnify or defend the violating trustee, employee, or volunteer.”
Step 2: Conduct a criminal background check[3] prior to hiring employees or accepting volunteers and conduct an annual search of the New York State sexual offender registry to verify that no trustees, volunteers, or employees are on the list (if they are, consult a lawyer regarding next steps).[4]
Step 3: Double-check that every use of library space by outside groups is per a written contract that ensure such users are: a) covered by SAM insurance[5] and b) have agreed to “hold harmless and indemnify” the library, its employees, trustees, and volunteers from any claims.[6]
Step 4: Have a “zero tolerance” policy for any abuse or threats of abuse and enforce the policy “without fear or favor” so the library cannot be accused of being on notice of retaining personnel with abusive tendencies (which can support a claim of “negligent hiring” or “negligent retention”).
Step 5: Maintain a policy that upon notice of a potential SAM claim, the library retains legal counsel to immediately conduct a confidential investigation. [NOTE: it sounds almost silly to say this, but since a SAM claim is also a claim of illegal sexual harassment, this “immediate investigation” approach is already 90% met in a library’s state-mandated Sexual Harassment Policy; the difference is that the “immediate investigation” should be done by a lawyer so the results can be used to either defend the library AND/OR to take corrective action with regard to an offending trustee/employee/volunteer].
Step 6: Maintain a fund balance of at least $20,000.00 dollars[7] that can be readily accessible “for trustee, employee, and volunteer indemnification and library defense” upon a vote of the trustees.[8]
Step 7: Be ready to face a financial crisis at the library in the event of a worst-case scenario (a claim that—despite every possible protection—results in a finding of liability).
Step 8: Long-term, consider working with your cooperative library system or another group on an ongoing basis to explore finding SAM coverage for a group of similarly sized libraries. While libraries in New York can’t band together to jointly buy one insurance policy, entities in New York can loosely coordinate to shop for a good deal together and might be able to find a more favorable rate with a collaborative approach.[9]
I wish I had better news for the thoughtful member library that submitted this question. But if SAM coverage is truly unaffordable, the additional mitigation steps in this RAQ can help with being ready to both deter and fight a claim of liability. What’s admirable is that rather than simply ducking the issue, you are considering what’s best for the library and community.
Thank you for a very important question.
[1] Yes, there are some instances where, after an unfounded accusation, an institution can be paid for the cost of the proceedings. However, those instances are rare, and when they occur, they generally occur well into the proceedings.
[2] Under the New York Not-for-Profit Corporation Law, some library bylaws may even speak to this issue of “indemnification.”
[3] Libraries who decide to use pre-hire criminal background checks should adopt a policy to ensure compliance with applicable state and federal laws.
[4] These are both good practices even if your library has SAM coverage.
[5] Ironic, I know.
[6] Common examples of groups or professionals that should supply this coverage: the local school/clubs, scouts, tutoring and ELL programs, hobby clubs. Many of these types of organizations have coverage through a national entity or regional chapter.
[7] I know: for many small libraries, this number might as well be $20 million. I would add that for some type of easily dismissed claims, it is a bit high, while for others, it will prove woefully low.
[8] The advantage of this approach is that the fund is also available for other unlikely contingencies.
[9] While the success of such an initiative is by no means assured, I have seen it work.
Tag:
SAM coverage, Insurance, Policy, Association Libraries, Safety, Liability
