Legal Memorandum: Insurance Coverage for Sexual Abuse in VT

Issue: When do sexual abuse endorsements of an insurance policy afford coverage under Vermont law?

Area of Law: Insurance Law
Keywords: Sexual abuse or molestation; Insurance policy; First Encounter Rule
Jurisdiction: Vermont
Cited Cases: 89 F.3d 1386; 26 F.3d 1359
Cited Statutes: None
Date: 03/01/2006

Courts in several jurisdictions have adopted the “First Encounter Rule” as the correct rule, even in the absence of specific contract language.  See Serritella, 39 Cath. Law. at 65-66.  “As the name suggests, under the First Encounter Rule the policy in effect at the time of the first act of abuse provides coverage for all the damages resulting from the abuse.  This is so despite the fact that the acts of abuse may span several years and several policy terms.”  Id. at 65.  Some courts apply the doctrine even though others recognize that “the first encounter rule would deny coverage to a child who was molested a day before the [school] procured insurance coverage, even though separate molestations continued through the policy year and beyond.”  Soc’y of Roman Catholic Church v. Interstate Fire & Cas. Co., 26 F.3d 1359, 1366 (5th Cir. 1994).

The “occurrence” that triggers coverage is not the incident of sexual abuse itself but, instead, the “exposure” to the injurious conditions the molester created.  See Diocese of Winona v. Interstate Fire & Cas. Co., 89 F.3d 1386, 1390 n.5 (8th Cir. 1996).  That case involved a claim against the Diocese for its alleged negligent supervision of a sexually abusive priest.  The court made clear that with respect to this kind of claim the incidents of sexual abuse or molestation are not the “occurrence” that triggers coverage:

In understanding this analysis it is important to distinguish the occurrence from the injury […]


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