Pennsylvania Supreme Court Rejects Insurers’ Arguments that Public Policy Bars Coverage for Hotel Sex-Trafficking Claims
By: Donald W. Kiel, Erin D. Fleury, and Kyle C. McLester
A pro-policyholder trend addressed in one of our recent posts continued in July, when the Pennsylvania Supreme Court unanimously rejected insurers’ efforts to invoke public policy to avoid their coverage obligations to hotel operators accused of benefiting from the use of their hotels by third-party criminals to commit criminal sex trafficking.
On 21 July 2026, the Pennsylvania Supreme Court issued its opinion in Samsung Fire and Marine Insurance Co., Ltd (U.S. Branch) v. RI Settlement Trust.1 In Samsung, the Court answered a certified question from the US Court of Appeals for the Third Circuit as to whether Pennsylvania public policy overrides an insurer’s contractual duty to defend and/or indemnify a hotel operator for civil liability arising from sex trafficking at the hotel.
The case was first heard by the US District Court for the Eastern District of Pennsylvania (Eastern District), which ruled in favor of the insurers, concluding that because the Pennsylvania legislature had criminalized certain sex trafficking conduct, Pennsylvania public policy relieved the insurers of their coverage obligations. The policyholders appealed, and the Third Circuit asked the Pennsylvania Supreme Court to decide whether Pennsylvania’s “overriding public policy” against sex trafficking abrogates an insurer’s duty to defend or indemnify an insured alleged to have enabled or benefited from such conduct.
The Pennsylvania Supreme Court answered that question with a resounding no. In Samsung, the Court held that “neither an insurer’s duty to defend nor its duty to indemnify is abrogated on the basis of public policy when the insured is alleged to have enabled or profited from sex trafficking.” Although the Samsung court recognized that the Pennsylvania General Assembly established Pennsylvania’s policy against sex trafficking by criminalizing the conduct, the criminal statute did not provide a basis for “the judicial crafting of an exception to insurance coverage in a policy otherwise silent on the subject.” In other words, a public policy against sex trafficking itself does not authorize a court to rewrite an insurance policy to create an exclusion not included in the policy.
Samsung is a significant decision for policyholders facing lawsuits alleging that they enabled or benefited from sex trafficking committed by third-party criminals at their hotels. Before Samsung, no state supreme court had addressed these arguments, allowing insurers to rely on a series of cases arising out of the Eastern District, which predicted that Pennsylvania’s public policy would bar coverage, even though this series of cases from the Eastern District were the only decisions in the country supporting a public-policy-based exception to coverage in this regard.
The Pennsylvania Supreme Court has now made it clear that those predictions of Pennsylvania law were incorrect and unanimously held that insurers may not avoid their contractual obligations by invoking public policy as a substitute for policy language in the context of sex-trafficking cases. Accordingly, policyholders should remain skeptical of insurers’ assertions of “public policy” defenses against coverage.2
Footnotes
1 Samsung Fire and Marine Insurance Co., Ltd (U.S. Branch) v. RI Settlement Trust, _ A.3d __, No. 61-EAP-2024, 2026 WL 2115725 (Pa. 21 July 2026).
2 See Policyholder’s Guide to the Law of Insurance Coverage (§ 6.03).