Posted on 18 Jan 2013 by Neilson
Former assistant Penn State University football coach Gerald Sandusky, who was convicted in 2012 of 45 counts of sexually abusing 10 boys, has withdrawn claims seeking coverage for defense costs and indemnity from his homeowners insurer, State Farm Fire and Casualty Co.
State Farm had argued in a suit filed in the U.S. District Court for the Middle District of Pennsylvania that Sandusky's homeowners insurance policy should not be applied to cover Sandusky's claims for coverage in connection with both criminal and civil cases. Sandusky withdrew his claims and advised State Farm he had no further obligations, according to court documents.
"We feel this issue has been resolved," said Dave Phillips, a spokesman for State Farm.
Dorothy Sandusky, Gerald Sandusky's wife, who has not been sued, reserves her right to seek defense costs and indemnity from State Farm for any pending or future claims, according to court documents.
Sandusky was convicted of 45 counts of child molestation in June, on charges he used a charity he founded to prey on young boys and molest them over a 15-year period. He is being held in isolation in a Pennsylvania prison. He has also been sued by some of his victims.
State Farm argued in its complaint the allegations made in the criminal and civil cases brought against Sandusky fall into several excluded areas, which the company said should nullify the policy and the indemnity requirement. State Farm said there is no provision in the policy for defense of criminal charges against a policyholder.
State Farm said such exclusions as the charges made against Sandusky should be considered willful and malicious, which the policy excludes. The complaint also said Sandusky often acted in a business capacity when committing his crimes, which the policy also considers an exclusion.
Other Sandusky-related lawsuits are still working their way through court.
In June, a federal judge in Pennsylvania rejected Federal Insurance Co.'s argument that it is not obligated to cover the legal defense costs stemming from the sexual abuse criminal charges against Sandusky, determining Federal Insurance's request was premature. Federal Insurance, a Chubb subsidiary, wrote directors & officers insurance for Second Mile, Sandusky's nonprofit organization.
Penn State filed a countersuit against the writer of its commercial general liability policy, alleging Pennsylvania Manufacturers' Association Insurance Co. has refused to cover legal costs that it is required to pay under the policy.
State Farm Fire and Casualty Co. currently has a current Best's Financial Strength Rating of A+ (Superior).