Carriers
Nationwide unit escapes indemnity duty after foster care boy's fatal restraint
By Insurance Wire Staff, . Insurance Wire.
A Nationwide unit is not required to indemnify a Kentucky foster care facility for its settlement in the death of a seven-year-old boy who was fatally restrained by care workers, a federal appeals court has ruled, according to Business Insurance. The court found that the restraint fell within the policy's professional services exclusion, relieving the insurer of any obligation to cover the settlement amount.
The case turned on the scope of a standard commercial general liability policy, which provides broad coverage for bodily injury and property damage but typically carves out acts that constitute professional services. Business Insurance reported that the court treated the physical restraint of the child as such a service, placing it outside the CGL policy's coverage grant.
The professional services exclusion is a common feature of CGL policies, designed to push liability arising from specialized or skilled conduct toward professional liability or errors-and-omissions coverage rather than the general liability form. The logic is that a CGL policy is not priced or structured to absorb the risks inherent in the exercise of professional judgment. Courts have long disagreed, however, about where the line falls between an ordinary physical act and one sufficiently connected to professional practice to trigger the exclusion.
This ruling places the restraint of a child in a foster care setting firmly on the professional side of that line. The practical consequence for the facility is that whatever settlement it reached with the boy's family, it bore that cost without the benefit of its CGL carrier. No official reports establish whether the facility carried any separate professional liability or abuse and molestation coverage that might have responded, or whether any coverage dispute on those policies is ongoing.
For underwriters and brokers working in the social services and foster care segment, the decision reinforces that CGL policies are a limited tool when the underlying conduct involves trained care workers acting in their professional capacity. Physical restraint in residential care settings is a regulated, trained activity in most jurisdictions, and courts that characterize it as professional conduct will consistently route coverage disputes toward the professional liability form. Facilities that rely primarily on CGL coverage for their liability exposure may find themselves without a responding policy in precisely the situations that generate the largest claims.
The harder question the ruling leaves open is what happens when a facility does not carry professional liability coverage, or carries limits too low to absorb a wrongful death settlement. In those cases, a coverage exclusion does not reduce the harm; it shifts the loss entirely onto the facility, its owners, or goes uncompensated. That is a placement and risk management question as much as a legal one, and the decision gives brokers serving this class of business a concrete reason to revisit the coverage structures they are recommending.
What to watch is whether other circuits or state courts facing similar fact patterns follow this reasoning, and whether the foster care and residential treatment sector sees any movement from insurers to clarify policy language around physical intervention procedures specifically.
Source: https://www.businessinsurance.com/insurers-avoid-indemnity-in-death-of-boy-at-foster-facility/
Insurance Wire provides news and information, not insurance, legal, or financial advice. Consult a qualified professional about your specific needs.