What is Sexual Abuse and Molestation Liability (SML)
A Sexual Abuse and Molestation Liability (SML) or Safeguard policy is designed to protect organisations’ legal liability to third parties for allegations of sexual abuse, molestation, or mistreatment of a sexual nature.
Historically, coverage for abuse and molestation liability was implied in General Liability policies which often did not explicitly state that cover was awarded but would pay out for such claims regardless or coverage was expressly included with a small sublimit. As insurers started to tighten their stance, these exposures have now been routinely excluded or severely capped. Standalone Sexual Abuse and Molestation Liability Insurance is therefore recommended for organisations who may be at risk without cover for this particular exposure.
Nature of contract
The policy is claims made meaning the allegations against the policyholder must first be made against it, and notified to insurers, during the period of insurance. For more information on claims made policies refer to our article here.
Who needs SML?
This type of policy is recommended for the following businesses:
- Schools, camps, and childcare centres
- Healthcare providers and disability services
- Non-profits and religious organisations
- Contractors working with vulnerable populations
- Residential, aged, or personal care providers
What is covered by an SML policy?
Insurers will indemnify the policyholder for:
- Defence costs and expenses – to assist with the defence of the allegations.
- Wrongful Acts – cover for negligent employment, investigation, supervision or training or retention of staff who commit an act of abuse or molestation.
- Crisis management and communication services – to help manage reputational fallout and public relations costs.
What is not covered by an SML policy?
Some common exclusions include:
- Known facts, circumstances and prior claims:
The policy will not cover any matter, fact, circumstance or claim that has been notified, or otherwise should have been notified in a prior policy period. - Insured against insured
Any claim brought by or on behalf of any insured person against another. - Indemnity to perpetrator
Any claim brought against an insured who personally committed, assisted or participated in an act of sexual abuse or molestation. - Retroactive date
Any claim brought before the ‘trigger date’ provided for in the policy.
The policy will not cover any conduct giving rise to claims, where that conduct happened before the retroactive date. You must ensure that the retroactive date is at a time on or before the date in which you first started providing your services. Again, here the claims made nature of the policy requires the policyholder to have high regard to the retroactive date. The retroactive date will be set in the schedule – if it is not there, the policy wording, in particular, the endorsements, should be checked.
SML claims examples
Employee accused of misconduct
An allegation arises that an employee engaged in inappropriate behaviour with a minor. The policyholder is sued for negligent hiring and supervision. The SML policy responds with legal defence and settlement costs.
Youth Program Accusation
An organisation operating a youth program receives a claim that one of its educators engaged in inappropriate conduct with a minor participant. The policyholder is further accused of failing to respond to earlier concerns about the coach’s behaviour. The SML policy helps cover the legal defence costs and supports efforts to manage reputational fallout.
Claims process and considerations
Policyholders will have access to comprehensive abuse prevention and crisis response services. As soon as the policyholder becomes aware of any potential event it is important that the insurer is promptly notified. This proactive approach assists in preventing future harm and helping the victim access necessary support and begin the recovery process.
This may also be a legal requirement as is the case with the National Quality Framework (NQF) Reporting Reform (2025). As of 1 September 2025, early learning centres under the NQF must notify regulatory authorities within 24 hours of any allegation, complaint, or incident involving physical or sexual abuse being made; this represents a significant shift from the previous 7 day window.
Underwriting information required
The following information is useful to insurers.
- List of activities to be undertaken and insured.
- Number of staff working with vulnerable populations.
- Safeguarding policy & response procedures in the event of an incident.
Conclusion
The fallout from a sexual abuse allegation can be disastrous with many companies unprepared for such an event. It is vital to partner with an insurer that offers crisis response and risk management to protect those affected.
For personalised advice regarding Sexual Abuse and Molestation Liability Insurance and to obtain a quote, please contact a Bellrock Advisor.
