Q: What does the Boy Scouts of America’s bankruptcy filing mean for churches who have hosted or chartered Boy Scout troops and their insurance coverage?

A: While the bankruptcy proceeding may eliminate certain protections and the ability to recover from the Boy Scouts of America for past incidents of sexual abuse or injury, it is unlikely to have any effect on a church’s own liability coverage.

The Boy Scouts of America (BSA) filed for Chapter 11 bankruptcy in February 2020, following a large number of individual lawsuits that were filed against the national organization based on allegations of child sexual abuse. After about a year and a half, the BSA reached an $850,000,000 settlement with approximately 70,000 individuals who say they were sexually abused as minors by scout leaders and others during Boy Scout activities.

For churches and other ministries that have served as chartered organizations for a Boy Scout or Cub Scout troop, BSA and their local councils have historically agreed through a charter agreement to provide liability insurance coverage for the chartered organization and to indemnify, or take financial responsibility, for claims against the chartered organization by third parties. The effect of the bankruptcy will likely eliminate future claims and judgments against BSA for acts or events that took place prior to the bankruptcy. In effect, this could eliminate BSA’s obligation to indemnify a church for past incidents involving a Boy Scout troop that the church chartered or hosted.

If your ministry has ever hosted or chartered, or is considering hosting or chartering, a Boy Scouts troop and is wondering about legal implications to your ministry, you should consult with a local attorney. If your ministry is a part of a denomination, it would also be a good idea to check with your local, regional, or national headquarters for guidance.

Insurance Coverage

Although BSA and their local councils agreed to indemnify chartered organization churches and provide liability insurance on their behalf, it is unlikely that these obligations agreed to in agreements signed prior to the bankruptcy will remain after the bankruptcy is completed. If BSA liability insurance coverage is unavailable for chartered organization churches, then the churches will need to look to their own liability insurance. This is especially true if the chartered organization church is sued directly.

Accordingly, churches are still encouraged to ensure they have liability coverage for scouting activities through their insurance policy. For churches and other ministries that have had occurrence-based liability coverage through their insurance carrier, coverage would apply to covered claims as long as the policy was in effect at the time of the incident. Other liability policies apply on a claims-made basis, meaning the claim must be submitted during the period of time that the policy is in effect. If an allegation arises after a policy expires or the policy period ends regarding past acts related to a chartered Boy Scouts troop, an occurrence-based policy would still generally provide coverage for covered claims. Brotherhood Mutual’s liability coverages are provided on an occurrence basis. If you are aware of a past or present incident that may give rise to a claim, you are encouraged to contact your insurance carrier or your agent.

Posted October 23, 2020. Updated September 13, 2021.

Important information: Brotherhood Mutual is pleased to provide Legal Assist as a complimentary resource. The services we offer through Legal Assist are intended to provide general legal information to our current and prospective policy holders.

The information provided is intended to be helpful, but it does not constitute legal advice and is not a substitute for the advice from a licensed attorney in your area. Accordingly, no attorney/client relationship is created through this process, and no legal advice will be provided. We strongly encourage you to regularly consult with a local attorney as part of your risk management program.