NU Online News Service, July 24, 11:14 p.m.EDT

Convicted child abuser Gerald Sandusky has looked to hishomeowners insurer, State Farm, for defense and indemnity costsrelated to his criminal trial and a civil lawsuit filed againsthim.

On July 18, State Farm filed to have a federal judge declare thecompany has no obligation to defend the former Penn StateUniversity assistant football coach in any criminal case, and itdoes not have any duty to defend or indemnify Sandusky in a civilcase naming his charity, The Second Mile, as a defendant.

Sandusky has been found guilty on 45 of 48 counts relatedto the sexual abuse of boys.

The insurer has been providing a defenseto Sandusky for the civil action filed in November2011—shortly after Sandusky was first charged with sexcrimes—involving his charity for children with dysfunctionalfamilies, according to court documents filed in U.S. District Courtfor the Middle District of Pennsylvania.

State Farm says it issued a “reservation of rights letter”to Sandusky, which informs a policyholder that an insurer mayeventually deny coverage for all or part of the claim.

According to court documents, State Farm began insuringthe Sandusky home in State College, Pa. inApril 1985. It is primarily a property coverage policy with limitedpersonal liability coverage applying only to bodily injury causedby an occurrence.

The policy “excludes coverage for bodily injury that isintentionally caused by the policyholder” and it does not coverinjury due to “willful and malicious acts of the policyholder.”

Penn State and its primary General Liability insurer,Pennsylvania Manufacturer's Association Insurance Co.(PMA), have filed lawsuits against each other over legalexpenses. PMA says it has no duty to defend theschool.

Penn State and United Educators—reportedly the writerof the university's Educators Legal Liability coverage—arecurrently not waged in litigation. The insurer may pay the schoolto take care of certain covered aspects of the policy, but it isdoubtful the insurer will be picking up any of the costs related tosettlements of civil lawsuits.

Shortly after Sandusky wasconvicted, Penn State asked victims to participatein a program to resolve Sandusky-related claims against theschool.

The funds will likely come from the school's captive insurer,Nittany Insurance.

Yesterday the NCAA finedthe Penn State University $60 million andimposed a four-year postseason ban on its football program whilereducing the number of scholarships it can issue. The associationalso stripped former head coach Joe Paterno of all wins from 1998to 2011.

An independent investigation by a firm led by Louis Freeh,former director of the FBI, concluded that “in order to avoid theconsequences of bad publicity, the most powerful leaders at PennState University (including Paterno) repeatedly concealed criticalfacts relating to Sandusky's child abuse from the authorities,Board of Trustees, Penn State community and the public.”

State Farm Pulls Sponsorship

State Farm spokeswoman Arlene Lester confirms the insurer hasdecided to stop its sponsorship of the football program at PennState. “This includes pulling signage and radio ads for homegames,” she says in an email.

State Farm will continue to sponsor other sports program atthe university, such as basketball, and it will keepbacking NCAA football countrywide, Lester adds.