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Insurance Will Likely Not Cover Penn State Fines & Penalties Imposed by the NCAA & Big Ten Council

Source: Business Insurance - Mike Tsikoudakis

Posted on 24 Jul 2012 by Neilson

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Penn State FinesPennsylvania State University's insurance coverage likely will not respond to the $73 million in unprecedented fines and penalties imposed by the NCAA and the Big Ten Council of Presidents and Chancellors for its failure in handling allegations of child sexual abuse by former Assistant Football Coach Gerald A. Sandusky.

The NCAA imposed a $60 million fine to Penn State—the equivalent of a year's gross revenue from the football program—along with a four-year postseason ban and vacating Penn State's football wins since 1998, among other penalties, the NCAA said Monday in a statement.

The Big Ten Council, which oversees the Big Ten college football conference, also censured Penn State with a $13 million fine, according to a separate statement.

Both groups, which based their fines and penalties on an independent report released by former federal judge and former director of the FBI Louis Freeh, said the money will be donated to programs and charitable groups dedicated to child abuse prevention.

'Normally not covered'

“Generally speaking there is no insurance coverage for these types of administrative fines and penalties,” said John Roskopf, Chicago-based vp of risk management for Educational & Institutional Insurance Administrators Inc. in Chicago, in an email.

“Fines and penalties are normally not covered,” Los Angeles-based Teena Hostovich, executive vp at Lockton Cos. L.L.C., said in an email. “It is considered against public policy to insure these.”

The penalties come as the embattled university faces complex civil lawsuits after Mr. Sandusky's conviction on child sexual abuse charges.

Penn State did not immediately return calls for comment.

Penn State also faces significant federal penalties for failure to comply with the The Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act of 1990, which requires colleges and universities to report campus crime.