Connecticut Nonprofits Face Rising Liability Insurance Costs Threatening Foster Care Programs
Connecticut nonprofit organizations that operate foster care programs for high-need children are confronting significant increases in liability insurance costs, threatening the sustainability of these critical services. The rise in premiums and the withdrawal of insurance coverage are tied to a 2022 federal law that removed the statute of limitations for child sex abuse lawsuits, extending potential legal exposure for providers many years after alleged incidents. This legislative change aims to enhance justice for abuse victims but has led insurance companies to either raise premiums drastically or terminate long-standing liability policies for foster care providers.
Providers like the Waterford Country School and Klingberg Family Centers report sharp premium increases, reductions in coverage limits, and difficulty securing policies despite a clean claims history. These elevated insurance expenses can consume a significant portion of foster care service contracts, imposing financial stress on nonprofits. Industry experts note that courts and juries increasingly hold providers liable, with faster case resolutions and higher awards for damages, prompting insurers to settle claims more readily and to approach underwriting with heightened caution.
The limited availability of specialized liability insurance for foster care programs is creating a market squeeze, which nonprofits warn could lead to program closures and exacerbate existing challenges in the child welfare system. Stakeholders have engaged with Connecticut’s Department of Children and Families and state insurance regulators to address the issue, with legislative efforts underway, including a proposed Senate Bill 1322 to study insurance market conditions impacting nonprofit foster care providers.
Nationally, this trend is reflected in reports indicating that nonprofit foster care providers face increasing difficulty obtaining and affording liability insurance, with costs rising faster than inflation due to litigation and policy environment changes. Recommended policy responses include state and federal liability protections for providers, development of specialized government-backed insurance options, and creation of victim compensation funds to balance legal accountability and insurance market stability.
Connecticut officials recognize the urgency of these insurance market challenges as foster care programs provide essential, trauma-informed care intended to reduce reliance on more restrictive psychiatric placements. Without intervention, nonprofits fear a decline in available foster care placements, further straining child welfare resources. The state is in preliminary discussions to devise sustainable solutions to prevent disruption of critical nonprofit services for vulnerable children.