A Carefully Drafted Molestation or Abuse Exclusion in a Commercial General Liability Policy Will Likely Exclude Coverage for Costly TVPRA Human Trafficking Claims

Congress enacted the Trafficking Victims Protection Reauthorization Act of 2003 (TVPRA) to afford human trafficking victims a civil framework for recovering money damages from their traffickers. The statute initially limited civil liability to those who perpetrated human trafficking crimes against the victim. In 2008, Congress amended the TVPRA to allow recovery from those who directly benefit from the human trafficking, by providing “[a]n individual who is a victim of a violation of this chapter may bring a civil action against the perpetrator (or whoever knowingly benefits, financially or by receiving anything of value from participation in a venture which that person knew or should have known has engaged in an act in violation of this chapter) in an appropriate district court of the United States and may recover damages and reasonable attorneys fees.” 18 U.S.C. § 1595(a). This amendment has resulted in a plethora of lawsuits against direct beneficiary defendants, which largely consist of hotels and motels, and in return, insurers have incurred tremendous costs defending and indemnifying their insureds against such claims.

The direct beneficiary claims against hotels and motels often allege that rooms were rented by the perpetrators to sell the victim in sex trafficking and that the hotel/motel knew or should have known the trafficking was occurring. Further, the lawsuits allege the trafficking victims were physically injured and many assert the trafficking victims were held captive in the rooms. As a result, with respect to the duty to defend, many courts have held that the complaints potentially allege “bodily injury” caused by an “occurrence,” since the TVPRA only requires that the hotel/motel “should have known” the trafficking was occurring. Further, due to allegations that the victim was held captive, some courts have concluded the “personal and advertising injury” offense of “[f]alse arrest, detention or imprisonment” potentially applies.

While many commercial general liability policies include molestation or abuse exclusion endorsements, the language of such exclusions vary greatly. Some molestation or abuse exclusions include “care, custody or control” of the insured language, in which the victim had to be in in the “care, custody or control” of the insured hotel or motel for the exclusion to apply. Accordingly, most courts have held that the exclusion does not bar coverage for a TVPRA claim against a hotel or motel since the victim was not in the “care, custody or control” of the insured hotel or motel. Starr Indem. & Liab. Co. v. Choice Hotels Int’l, Inc., 2021 U.S. Dist. LEXIS 112980 at *28-32 (S.D.N.Y. June 18, 2021) (abuse or molestation exclusion does not apply to TVPRA sex trafficking claims because some of the claims could not have occurred while the plaintiff was in the “care, custody or control” of the insured); Millers Capital Ins. Co. v. Vasant, 2018 U.S. Dist. LEXIS 182956 at *6-7 (D. Md. Oct. 25, 2018) (concluding that plaintiff was not in hotel’s “care, custody or control” and therefore exclusion did not apply); cf. Holiday Hospitality Franchising Inc. v. AMCO Ins. Co., 983 N.E.2d 574, 580-81 (Ind. 2013) (child was in the “care, custody or control” of a hotel, and therefore, the abuse or molestation exclusion applied to bar coverage for the claims arising out of child’s molestation while staying at the hotel).

Ideally, a molestation or abuse exclusion should be drafted broadly to exclude coverage for both “bodily injury” and “personal or advertising injury” “directly or indirectly resulting from” or “in any way involving” molestation or abuse. The exclusion should also broadly define molestation or abuse to include threatened or actual physical or sexual molestation or abuse, including allegations of sex trafficking, among other examples of physical or sexual molestation or abuse. A court interpreting a broadly drafted exclusion is more likely to conclude that an insurer has no duty to defend or indemnify its insured against TVPRA claims. See, e.g., Joy Constr. Corp. v. Starstone Specialty Ins. Co., 2025 U.S. Dist. LEXIS 113226 at *17-25 (S.D.N.Y. June 13, 2025) (distinguishing Choice Hotels, supra, and concluding the “Sexual & Physical Abuse Exclusion” barred coverage for EEOC claims because the exclusion included “directly or indirectly resulting from” or “in any way involving” language); cf. Northfield Ins. Co. v. Northbrook Indus., Inc., 749 F. Supp. 3d 1325 at *20-22 (N.D. Ga. Sept. 16, 2024) (concluding the abuse or molestation exclusion did not apply to the duty to defend because the trafficking victim’s alleged physical deterioration could have occurred in the absence of abuse or molestation).  In addition to a carefully drafted exclusion, an insurer can also urge it is against public policy to provide insurance coverage to insureds allegedly involved in directly benefiting from human trafficking. Samsung Fire & Marine Ins. Co., Ltd. v. UFVS Mgmt. Co., LLC, 2023 U.S. Dist. LEXIS 46508 at *23-28 (E.D. Pa. March 20, 2023); see also, Nautilus Ins. Co. v. Motel Mgmt. Servs. Inc., 320 F. Supp. 3d 636, 643 (E.D. Pa. 2018) aff’d on other grounds, 781 Fed. App’x 57, 60 (3d Cir. 2019).