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🚫 '''Sexual misconduct exclusion''' is a [[Definition:Policy wording | policy provision]] that removes coverage for [[Definition:Claims | claims]] arising out of actual or alleged sexual misconduct, abuse, molestation, or harassment committed by or on behalf of the [[Definition:Insured | insured]]. Commonly found in [[Definition:General liability insurance | general liability]], [[Definition:Professional liability insurance | professional liability]], [[Definition:Directors and officers (D&O) insurance | D&O]], and [[Definition:Employment practices liability insurance (EPLI) | employment practices liability]] policies, this exclusion reflects insurers' determination that certain conduct is so egregious — and often intentional — that it falls outside the scope of insurable risk under fundamental principles of [[Definition:Public policy | public policy]] and [[Definition:Insurability | insurability]].

📑 The application of this exclusion varies considerably across policy types, jurisdictions, and market segments. In some policies, the exclusion is absolute, barring coverage for both defense costs and indemnity payments regardless of whether the misconduct is proven or merely alleged. In others — particularly certain [[Definition:Employment practices liability insurance (EPLI) | EPLI]] forms — coverage for defense costs may be preserved until a final adjudication or admission of guilt, recognizing that allegations alone should not strip an insured of the right to mount a legal defense. Institutional policyholders such as schools, religious organizations, healthcare providers, and youth-serving nonprofits face particular scrutiny from [[Definition:Underwriting | underwriters]] in this area, and the scope of the exclusion is often a heavily negotiated term. Some [[Definition:Insurance carrier | carriers]] offer limited "innocent insured" carve-backs under a [[Definition:Severability of interests | severability of interests]] framework, ensuring that an organization's coverage for [[Definition:Vicarious liability | vicarious liability]] or negligent supervision claims remains intact even when the exclusion eliminates coverage for the individual perpetrator.

⚖️ The prevalence and strictness of sexual misconduct exclusions have intensified in response to high-profile abuse scandals across multiple sectors and jurisdictions, from institutional abuse cases in the United States and Australia to corporate harassment claims globally. Insurers have faced enormous retrospective [[Definition:Claims | claims]] costs from historical abuse — particularly in long-tail [[Definition:Liability insurance | liability]] lines — prompting a broad market tightening. For [[Definition:Insurance broker | brokers]] advising clients in higher-risk sectors, understanding the precise boundaries of this exclusion is essential: the difference between a full exclusion and one with a defense-cost carve-back can determine whether an organization can survive litigation. The exclusion also intersects with broader [[Definition:Risk management | risk management]] conversations, as insurers increasingly require evidence of safeguarding policies, background checks, and reporting protocols as [[Definition:Underwriting | underwriting]] conditions before offering any residual coverage in this area.

'''Related concepts:'''
{{Div col|colwidth=20em}}
* [[Definition:Exclusion]]
* [[Definition:Employment practices liability insurance (EPLI)]]
* [[Definition:Severability of interests]]
* [[Definition:Professional liability insurance]]
* [[Definition:Vicarious liability]]
* [[Definition:General liability insurance]]
{{Div col end}}

Definition:Sexual misconduct exclusion - Revision history

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