November 16, 2021

How Reviver Laws Turn Back the Clock

Twenty-four states and the District of Columbia have already enacted reviver laws. Some permit claims only against perpetrators, but some, like those in Maine and Vermont, allow claims against other types of defendants, including churches, sports camps and schools. In addition, 35 states and the federal government have additional reviver laws pending which aim to extend or eliminate statutes of limitation.

Now that states have “moved the goalposts, … the window is opened for [claimants] to bring claims now,” noted John Glomb, CEO of Philadelphia Insurance Co. at a recent insurance industry virtual conference.

More Goalposts on the Move

In addition to sexual abuse claims, the window may also be opening for other types of reviver suites, as illustrated by the condo collapse in Surfside, Fla., this summer. “The law and the zoning requirements were that every 40 years a condo has to be updated and made sure that they’re up to code. This collapse happened, and they were on the verge of getting ready to prepare for the renovations to ensure that everything was stable…And then overnight the goalposts were moved to 30 years instead of 40 years,” said Glomb, predicting an emerging “cottage industry of litigation plaintiffs” to take advantage of the building code change in Florida.

Rate Adequacy

The question of rate adequacy deriving from these situations was certainly on the minds of insurance company executives at the conference — that is, how can they adjust their rates now to account for these unanticipated exposures? What really troubled them wasn’t policies currently in effect. They can increase rates at renewal. Rather what concerned them were policies that had been issued in the past years, often long past years. In other words, occurrence policies.

Occurrence vs. Claims-made Policies

An occurrence-based policy provides coverage for events alleged to have happened during the policy period — and it applies even if a lawsuit is brought many years after the policy period ended. This is the best type of protection to get because it continues providing coverage even after a significant amount of time has lapsed between the time of the alleged incident and the claim, which is often the case with child sexual abuse claims.

This is the opposite of a claims-made policy, which protects the business only during the policy period. Of course, because of lengthy statutes of limitation, such as with malpractice lawsuits and toxic waste legislation — and now reviver laws — fewer insurance companies are willing to offer occurrence coverage.

If your business has the potential to incur long tail liability, you can probably only buy claims-made coverage. Then, the solution is to purchase “tail coverage” which extends the current policy period into past periods with a “retroactive date.”

Legal Defense and Reputation Management Coverage

If your business has any exposure to these types of lawsuits, you should also consider buying insurance that includes legal defense costs and crisis management services to restore your reputation, goodwill and confidence in your organization. These can be especially important features if your business is faced with a sexual molestation or misconduct accusation. Please call us if you have questions about your liability insurance coverage.

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