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State high court rejects insurers’ coverage denial in sex trafficking case - Business Insurance Skip to content Register for free Search Search Log In Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers Risk Management Cyber Risks Pricing Trends Mergers & Acquisitions Technology Sponsored Content WSIA RISKWORLD Workers Comp & Safety Workers Comp Cost Control Pain Management Workplace Safety International EMEA Asia-Pacific Latin America People Events BI Intelligence Top 100 Agents & Brokers Best Places to Work 2025 Lists Directories Insurance Pricing BI Stock Index Magazine Current Issue Past Issues Subscribe Women to Watch ALL INsurance Resources Risk Perspectives Sponsored Content Webinars White Papers State high court rejects insurers’ coverage denial in sex trafficking case by Richard Sine Claims Disputes , General liability Jul 22, 2026 The Pennsylvania Supreme Court ruled Tuesday that insurers can’t assert a “public policy” defense to deny a claim arising out of alleged sex trafficking at a hotel, labeling the insurers’ reasoning “nonsensical.” In Samsung Fire and Marine Insurance Co. Ltd. (U.S. Branch); Harleysville Preferred Insurance Co. v. RI Settlement Trust, the Supreme Court justices ruled unanimously that insurers cannot escape their contractual duty to defend or indemnify a policyholder, even when the underlying allegations touch on criminal conduct. In legal terms, public policy refers to the principle that courts can refuse to enforce a contract term when it violates societal norms, such as by enabling criminal activity. The case stems from four lawsuits filed by women who say they were trafficked as minors at the Roosevelt Inn in Philadelphia. The women sued the hotel’s owners and operators, alleging negligence for failing to stop the trafficking. The hotel’s insurers argued that they had no duty to defend because Pennsylvania’s human trafficking law reflects a public policy against insuring such conduct. A federal district court ruled in favor of the insurers, relying on a 2004 Pennsylvania Supreme Court case in which insurers were excused from defending a man who sold heroin to his friend, who later died. On appeal, the Third Circuit Court of Appeals asked the state’s high court to clarify whether that reasoning extends to sex trafficking cases. The National Association of Mutual Insurance Companies filed a brief supporting the insurers, saying that Pennsylvania’s human trafficking law gives the court a basis for refusing to enforce the insurer’s duty to defend when the insured is alleged to have engaged in criminal conduct. The sex trafficking survivors filed a brief supporting the policyholders. They said the 2004 case should not apply because, unlike the heroin dealer, they were not accused of any crime, according to the ruling. The hotel owners were also not charged with any crime. Writing for the majority, Justice Christine Donohue rejected the insurers’ argument, noting the 2004 case was only a plurality decision and not controlling in the case. The court held that insurers who want to exclude coverage for certain criminal conduct should include an exclusion in the policy. In a concurring opinion, Justice David N. Wecht, said the insurers could have used “readily available” exclusions for injuries relating to the abuse of minors or harm resulting from criminal conduct by third parties. “To pitch the vague notion of ‘public policy’ as a tool to override clear contractual language is to ask the courts to save the insurers from the consequences of their own actions,” he wrote. “Under Insurers’ argument, we are expected to believe that a criminal would jeopardize his own liberty by endangering a victim because he knows that his insurer may compensate the victim. This is nonsensical,” Justice Wecht added. The high court returned the case to the appeals court. In recent years, hotels have been hit with multi-million dollar settlements and jury verdicts for sex trafficking on their premises, under a federal law that has allowed victims to sue any person or company that knowingly “benefits” from trafficking. In recent cases, state judges have ordered general liability insurers to defend hotels in these cases. The Pennsylvania ruling suggests that insurers may be required to indemnify as well, said John Ellison, a Philadelphia-based senior partner at Reed Smith who represented the RI Settlement Trust. The trust was formed after the Roosevelt Inn went bankrupt in the wake of the trafficking case. The case has been closely watched by attorneys involved in sex-trafficking cases. “This is welcome news for policyholders,” said Joseph K. Cole, a partner at Shumaker in Toledo, Ohio, who has defended hotels in trafficking cases. “The Court’s decision confirms that insurers cannot invoke vague ‘public policy’ arguments to avoid their coverage obligations.” The ruling brings the case one step closer to compensation for the victims, Mr. Ellison said. “I’m hopeful the insurers will get the message that the Supreme Court was sending that they ought to step to the plate and get these cases settled and get these bad experiences for the victims over with,” Mr. Ellison said. Samsung Fire and Marine Insurance, the first-named plaintiff insurer, did not respond to a request for comment. It is a Samsung subsidiary based in Ridgefield Park, New Jersey. The other plaintiff was Harleysville Preferred Insurance, a Nationwide subsidiary. Named on the defense side along with RI Settlement Trust were Nationwide and Philadelphia-based Ace Property and Casualty, a unit of Chubb. 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