Washington state’s child housing liability insurance crunch intensifies in 2026 as providers face soaring costs and coverage gaps, with Insurance Commissioner Patty Kuderer cautioning that a joint underwriting association won’t fix the crisis amid concerns over prior acts coverage, sexual abuse liability, and professional liability for foster care agencies.
Washington’s Office of the Insurance Commissioner (OIC) has delivered a stark message to lawmakers: Creating a joint underwriting association—a shared risk pool managed by insurers—would not effectively address the growing liability insurance challenges plaguing child housing service providers.
The report, submitted to the Legislature on December 31, 2025, highlights severe affordability and availability issues for organizations like child placing agencies (CPAs) and group family homes (GFHs). These entities, licensed by the Department of Children, Youth, and Families, provide critical foster care and placement services but are struggling to secure adequate coverage.
Providers can often find policies for future incidents, but insurers are increasingly reluctant to offer “prior acts” coverage—protection against claims arising from past events, which could date back years. This gap leaves organizations vulnerable to potentially ruinous lawsuits, especially related to historical allegations of abuse.
The crisis stems in part from a 2024 state law removing the statute of limitations for civil claims of childhood sexual abuse, effective June 2025. Although Washington already had broad limitations periods, the change heightened insurer caution nationwide, mirroring trends affecting youth-serving organizations.
Commissioner Patty Kuderer emphasized the severity: “This report confirms that our child placing agencies and group family homes are facing an insurance affordability and availability crisis. And we’ll need solutions beyond a joint underwriting association to fully address those issues.”
A joint underwriting association, while useful in other hard-to-insure markets, would likely require sky-high premiums to be actuarially sound, making it unaffordable for many providers. The report notes potential mitigations, like limiting prior acts coverage or focusing on prospective risks only, but stops short of recommending one.
Instead, it outlines alternative options for legislators:
- Increasing state reimbursement rates to providers so they can better afford premiums.
- Reviewing and possibly relaxing mandated coverage requirements.
- Updating standards of fault to provide liability shields for compliant organizations.
- Establishing a settlement fund for historic claims exceeding policy limits.
Notably, the report found no similar availability crisis for general childcare providers (like daycares), distinguishing this from broader child care insurance challenges.
Industry observers agree the issue reflects national trends, with insurers pulling back from high-risk social services due to rising litigation and reinsurance costs. Some experts suggest federal intervention may be needed for sustainable fixes.
Public reactions have been concerned, with advocacy groups for foster care highlighting risks to child welfare if agencies close due to uninsurance. Lawmakers face tough choices in a tight budget environment, balancing child protection with fiscal realities.
For U.S. readers, particularly in Washington, this crunch could strain the foster care system, potentially reducing placements and impacting vulnerable children. It underscores broader economic pressures on social services, where insurance costs affect taxpayer-funded programs and family stability amid ongoing debates on child welfare reforms.
As the 2026 legislative session approaches, stakeholders watch closely for action.
Washington state’s child housing liability insurance crunch in 2026, involving joint underwriting association limitations, prior acts coverage gaps, sexual abuse liability risks, professional liability challenges, and foster care provider impacts, demands innovative policy responses beyond traditional risk pools.
By Mark Smith
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