Child Victims Act Coverage Decision Upholds Insurers’ Broad Duty to Defend

Jan. 17, 2024

By Tae Andrews & Jeffrey L. Schulman

The recent decision in Century Indemnity Co. v. Archdiocese of N.Y. reaffirms an insurer’s broad duty to defend, which requires an insurer to defend against both covered and potentially uncovered claims in underlying lawsuits brought by third parties against an insured.

The Facts

In 2019, New York enacted the Child Victims Act, which created a revival window in which plaintiffs alleging childhood sexual abuse could file lawsuits that may otherwise have been time-barred. The Roman Catholic Archdiocese of New York is currently defending against approximately 1,500 of such lawsuits.

The Archdiocese’s insurers denied any defense or indemnity obligations and commenced a declaratory judgment action against its insured.

Key Takeaways

The trial court granted the Archdiocese’s motion to dismiss, holding that the underlying lawsuits clearly alleged negligent misconduct by the Archdiocese which was at least potentially covered under the policies. The court also rejected the insurers’ assertion that the underlying lawsuits only alleged uncovered, intentional misconduct by the Archdiocese.

Practice Pointers

A general liability insurer’s duty to defend its insured from lawsuits brought by third parties is exceedingly broad. The insurer must defend the entire lawsuit provided even one allegation is potentially covered. These policies typically cover allegations of bodily injury, property damage, and personal and advertising injury caused by an “occurrence” (with an “occurrence” generally meaning an accident, evaluated from the standpoint of the insured). The insurer’s broad duty to defend can also be thought of as “litigation insurance” – one of the key coverages insureds bargain for when purchasing general liability policies. It is important to know what coverage you have before facing potential liability from an underlying lawsuit and critical to know afterwards.

What's Next

The insurers appealed the decision, so the Appellate Division, First Department will consider these issues. This is a case to watch in 2024 and potentially beyond.