Navigating Liability Insurance and Risk Management for Foster Care Agencies

November 14, 2025

By Kate Kelly and Anthony Cirillo

Foster care agencies are at the brink. Increased litigation, rising insurance premiums and carriers exiting the insurance marketplace have left many agencies struggling to secure the coverage they need to protect themselves from significant exposures — at a price they can afford.

Contributing Factors

There are a number of factors contributing to the coverage crisis facing foster care agencies. These fall into two primary categories — societal and legislative changes and pressures on the insurance market.

Societal and Legislative Changes

• Today’s more litigious society and increased awareness stemming from greater media coverage and scrutiny has contributed to a surge in litigation and claims.
• Legislative changes, such as the Eliminating Limits to Justice for Child Sex Abuse Victims Act (2022) and the Child Victims Act (2019) in New York, have removed the federal statute of limitations for civil claims related to child sexual abuse.
• Several states – including New York, California, Pennsylvania and New Jersey – have expanded or created revival windows for filing previously time-barred cases, resulting in an influx of claims that are decades old and often result in significant payouts.
• Foster care agencies are facing higher caseloads and limited funding, contributing to overburdened systems that strain resources.

Insurance Market Pressures

• Rising claim frequency and severity have resulted in unsustainable underwriting losses for insurance carriers.
• Many insurers have exited the market and those remaining have significantly increased premiums, restricted coverage terms and reduced limit offerings.
• The shift in policy structures from “occurrence based” to “claims made” means that insurers are taking on risk for an unprecedented number of incidents that may have occurred 20 or 30 years ago.

Despite these challenges, liability coverage remains a legal requirement in most states, leaving foster care agencies struggling to secure the protection they need.

What You Can Do

With liability insurance harder to obtain, there are steps foster care agencies can take to help protect themselves, lower their risk and make themselves more attractive to insurers — beginning with building a strong foundation of risk management policies and procedures.

Comprehensive Policies and Procedures

Every foster care agency should maintain comprehensive, written policies and procedures covering child safety, abuse prevention, reporting requirements and staff and foster parent selection. These should be regularly updated to comply with all relevant regulations and best practices. Agencies must also establish clear protocols for incident reporting, documentation and follow-up actions — ensuring all responses and corrective measures are thoroughly recorded and retained. Additionally, contracts between the agency and foster parents should be properly executed and securely retained.

Vetting and Training Foster Parents and Employees

Agencies should implement and strictly adhere to procedures for thoroughly vetting all foster parents and employees — including background checks and referrals. They should also provide training on child safety and reporting requirements. Additionally, regular supervision and inspection of homes is essential to help identify potential risks early and often.

Acting Quickly to Remove Children from Questionable Environments

Many claims stem from allegations that the abused child was placed in an unsafe home, and the agency did not provide the correct environment for the child and/or did not remove the child quickly enough from an unsafe environment. Agencies need to act quickly to remove children from homes at the first sign that the environment is not safe.

How a Broker Can Help

The right insurance broker can be a valuable partner for foster care agencies. It’s important to work with a broker partner that has full access to the marketplace and stays abreast of emerging markets and/or alternative risk strategies to obtain coverage. Additionally, agencies should partner with a broker that has extensive experience and a proven track record of delivering coverage solutions, risk control guidance and claims advocacy to foster care agencies.

The Conner Strong & Buckelew Advantage

We work extensively with foster care agencies to develop and implement best practice risk controls that align with insurance carrier requirements for providing coverage — ensuring your agency is “best-in-class” and is represented as such in the insurance marketplace. Our deep relationships with domestic and emerging markets enable us to keep our pulse on the evolving landscape. Beyond traditional placement, we can also work with you to uncover creative solutions, such as captives, fronting solutions and/or risk retention groups. And when a claim occurs, our legal and claims advocacy teams will be right there to help ensure the most favorable outcome possible.

Contact a member of our team today to learn how our holistic approach can support your organization’s sustainable future.