Pennsylvania State University has sued Pennsylvania Manufacturers' Association Insurance Co.—the school's liability insurer of more than 50 years—for denying coverage for litigation costs related to former assistant football coach Jerry Sandusky.

According to the breach-of-contract complaint, the university has been sued or contacted by 30 claimants but the insurer has “failed and refused to agree to provide, and is not providing, to Penn State the benefits due under any PMA policy.”

Penn State is being sued by, or has been put on notice by, multiple victims of Sandusky, who was found guilty in June 2012 on 45 of 48 counts related to the sexual abuse of boys. He was sentenced to 30-60 years in prison.

“Penn State will aggressively pursue the coverage for which it has paid over $23 million since 1983, and to which it is entitled,” says university spokesman David LaTorre, in a statement emailed to PC360.

PMA has been the school's commercial general liability insurer since the 1950s. The insurer says it has no comment on the litigation.

LaTorre says PMA “has essentially abandoned a decades-long client.”

Soon after the first of these Sandusky-related suits was filed against Penn State, PMA filed a lawsuit in January 2012 seeking a declaratory judgment that it has no duty to defend or indemnify Penn State.

Penn State President Rodney Erickson has said the university plans to settle with the victims of Sandusky and a “bulk of the funding” for settlements will come from insurance.

Erickson says Penn State has “multiple stacks” of liability insurance as well as directors' and officers' liability insurance.

“The university continues to believe its General Liability and Directors & Officers insurance policies will cover the defense of claims brought against the university and its officers, employees and trustees,” says LaTorre. “Student tuition, taxpayer funds or donations will not be used.”

According to information in the suit, the policies conatin a $2 million per-occurrence limit and a $3 million aggregate limit, except for the policy periods from 1988-1990, which have slightly different limits.

In other recent, insurance-related news to come from the Sandusky scandal, a federal judge in Pennsylvania ruled Federal Insurance Co. has no duty to defend the convicted child molester and sex abuser.

Sandusky and his homeowners' insurer, State Farm, settled a lawsuit brought by the insurer to similarly have a judge declare the company has no obligation to defend Sandusky.

Special Reports /

Penn State Sues PMA for Coverage on Sandusky Claims

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