In #MeToo Era, New Hybrid SML/EPL Coverage Meets Important Need

Growing Exposures and Coverage Gaps Necessitate Certainty for Employers

A current trend in society and the workplace is growth in the reporting of the number of incidents alleging sexual harassment and other crimes. Although traditional Employment Practices Liability and Sexual Molestation Liability policies are available to respond to certain incidents CRC Group has developed this coverage to fill the coverage gap.

A Quick Timeline of the #MeToo Movement

Key developments in the global anti-sexual harassment movement


Headlines continue to bring attention to the problem of sexual harassment and other sexual crimes. In this era of #MeToo and #TimesUp, national attention has been focused on harassment and sexual assault, and high-profile defendants are facing prosecution or civil lawsuits. The #MeToo and #TimesUp movements began in the film and entertainment industry, but nearly every industry is now considering the impact of sexual misconduct.

A significant percentage of such incidents occur in the workplace. About six in 10 women and three in 10 men have been sexually harassed or received unwanted sexual advances, according to a 2018 survey by the Pew Research Center titled “Sexual Harassment at Work in the #MeToo Era.” Of those, 69% of women and 61% of men said the harassment or unwanted advances occurred in a professional or work setting as well as outside of work.

Preliminary 2018 data gathered by the Equal Employment Opportunity Commission shows a 50% increase in lawsuits alleging sexual harassment in the workplace from fiscal year 2017. According to the EEOC, charges of sexual harassment filed with the commission increased 12% in 2018 from a year earlier.

The federal Bureau of Justice Statistics’ crime data distinguishes between rape and sexual assault. Rape is defined as forced sexual intercourse including psychological coercion as well as force. Sexual assault refers to a range of victimizations, separate from rape or attempted rape, and is classified as a violent crime. These may include attacks or attempted attacks involving unwanted sexual contact. In addition, sexual assaults may involve touching, grabbing or verbal threats but not necessarily use of force.


Employers generally are aware today of federal and state laws prohibiting sexual harassment, but they may not necessarily understand the nuances and potential coverage gaps in the different insurance policies available to protect employers from liability.

Many employers have Employment Practices Liability Insurance, a valuable form of coverage that can respond to a variety of workplace risks, including sexual harassment. EPL policies, however, almost universally exclude bodily injury claims. Underwriters’ intent in EPL is to exclude claims involving rape, sexual molestation or sexual assault.

Sexual Molestation Liability, also known as Sexual Misconduct and Molestation Liability, insurance policies do typically respond to bodily injury and/or sexual abuse and threats of such acts. Standalone SML policies therefore can provide complementary coverage to EPL policies. But SML underwriters’ intent is to offer coverage for acts committed against third parties, such as clients of social service, healthcare and academic organizations. A coverage gap therefore may exist if an offender and victim are both employed by the insured organization — regardless of the employer’s industry.

For example, a recent lawsuit alleging sexual assault involving two volunteers at a social service organization led the organization to seek coverage under its EPL, SML and Commercial General Liability policies. None of the policies were deemed to provide coverage for that type of incident. Although the case was eventually settled, the organization had a potentially large gap in coverage for future incidents.

Organizations that serve children, the elderly and individuals with physical and/or developmental disabilities are often considered the most exposed to sexual harassment and molestation or abuse claims. In fact, such incidents can occur anywhere. Employers in other industries not traditionally associated with such incidents — manufacturing, professional services, financial services, to name only a few — may not realize they have an SML exposure. And even if these employers have EPL and SML coverage, they may not be fully protected for incidents between employees. Defending lawsuits is expensive and time-consuming, and the lawsuit can impair an employers’ reputation. Even worse, an employer with an EPL/SML coverage gap may have to bear those costs on its own.


Working with the London market, CRC developed a hybrid, combined SML/EPL policy that removes the coverage gap for acts involving employee-on-employee crime. This new coverage can be written on a primary or excess SML basis, with drop-down coverage for sexual molestation involving employees when written excess of a traditional EPL policy. Consider adding this hybrid SML/EPL coverage to your checklist of coverages discussed with insureds in advance of renewals, especially for insured organizations that work with children, the elderly, and those with physical and/or developmental disabilities.

To learn more about this coverage and how to help policyholders better manage their risks and protect their businesses, please contact your CRC representative.


Jason White is a Managing Director and Co-National Practice Leader in the ExecPro Practice in CRC’s Los Angeles office.

Mike Robison is a Vice President and Co-National Practice Leader in the ExecPro Practice in CRC’s Dallas office.