Definition
A circumstance, in a claims-made SAM policy, is sexual abuse and misconduct — or a reasonable suspicion of it — that has not yet given rise to a claim. Claims-made policies carry circumstance language because someone with responsibility for SAM risk management often has some idea a claim is possible before one is received.
Why Notify a Circumstance
Prudence pays in both directions. Failure to notify an insurer of what they consider a material fact may let them avoid a claim — or an entire policy. And an insured that moves insurer will find the new insurer excludes claims and circumstances known about at inception, by which time it may be too late to notify the previous insurer of a circumstance first known a year or two before. Better to notify something that could become a claim than to sit on it.
Claims-made policies usually provide that any claim arising from a notified circumstance is presumed first notified when the circumstance was — the notification preserves the cover in place at the time. Most insurers don’t penalize insureds for most circumstances; it is rare that what is known at first notification justifies altering the policy’s terms.
Mandatory Reports
An area of concern for some SAM insureds is whether a mandatory report the insured is aware of should be notified — and if yes, whether as a claim or a circumstance. Talk to your broker or insurer when you take out the policy to establish how mandatory reports should be addressed.