Insurers Be Ready: New Jersey’s Two-Year Window Reviving Time-Barred Sex Abuse Suits is Open

On December 1, 2019, the two-year look-back period created by New Jersey Senate Measure S477 went into effect, reviving claims of sexual abuse that would otherwise be barred under the statute of limitations.

In March 2019, S477 passed in the New Jersey State Senate by a vote of 32 to 1, followed by passage in the New Jersey State Assembly by a vote of 71-0, with five abstentions. The bill was signed into law by New Jersey Gov. Phil Murphy on May 13, 2019.

One of the most significant aspects of the new law is the two-year window that went into effect at the beginning of this month, permitting victims of child sexual abuse to commence civil lawsuits regardless of the victim’s age or when the alleged abuse occurred. Though it is premature to determine the immediate impact of the change in the law, if the effect of similar statutes in New York, Arizona, and Montana is any indicator, religious organizations and other nonprofit organizations, and their insurers, can expect to see a massive influx of claims in a very short period of time.

Importantly, New Jersey’s law not only revives time-barred claims against the actual perpetrator, but also revives claims against any other person or institution the victim alleges is responsible, in whole or in part, for the abuse. In addition, since S477 amends New Jersey’s Charitable Immunity Act and creates a carve-out to the New Jersey Tort Claims Act, nonprofit organizations and public entities that were historically immune from suit could now face liability stemming from sexual abuse claims for negligent hiring, supervision, or retention.

In addition to the look-back window, the law has extended the statute of limitations for claims of sexual abuse of a minor, allowing victims to bring suits until either their 55th birthday, or within seven years of their first realization that the abuse caused harm, whichever date is later. Before the new law, victims had to commence suit within two years of either the minor victim’s 18th birthday or the date the victim realized the abuse caused harm. Under the new law, adult victims, regardless of age, now also have seven years from the discovery of the abuse to file a lawsuit. From an insurer’s perspective, it is anticipated this increased scope of risk will directly impact the cost of premiums for certain types of nonprofit organizations and potentially limit the amount of coverage available in the market (which may be reduced via exclusionary provisions, or even sublimits for this type of risk).

Similar to New York’s Department of Financial Services, it is also expected that the New Jersey Department of Banking and Insurance will take a very active role in monitoring how carriers handle the influx of these child abuse claims. With many claims relating to abuse dating back 40 to 50 years, issues relating to lost policies are sure to arise. Insurers should be prepared to promptly locate policies or policy information when requested by its insureds and address coverage when coverage is deemed to exist. With the likely significant influx of claims and suits, insurance coverage disputes between liability carriers and their insureds are sure to follow.