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Penn State/PMA Coverage Battle Heats Up

The allegations joining Penn State and its officials with the Jerry Sandusky sexual-abuse cases provide a regrettable study of how we turn to insurance to help us through the worst of situationsat least financially.

By Diana B. Reitz, CPCU | Updated on April 20, 2012
The allegations joining Penn State and its officials with the Jerry Sandusky sexual-abuse cases provide a regrettable study of how we turn to insurance to help us through the worst of situations—at least financially. As these allegations play out, the media has been quick to discuss their development and speculate on how the university’s defense will be funded.

Penn State’s Openness Web site reports that the university carries General Liability and D&O insurance, “which are expected to cover the defense of claims brought against the university and its officers, employees and trustees” in the Jerry Sandusky case. The liability carrier is identified as the Pennsylvania Manufacturers’ Association (PMA), which has provided General Liability insurance for Penn State from the 1950s to the present. (PropertyCasualty360.com previously identified the D&O insurer as United Educators, a risk-retention group.)

Also mentioned on the Openness site is the fact that PMA filed a lawsuit in January asking that it be relieved of obligations to defend or pay for a civil lawsuit filed against Penn State in the first suit on the Sandusky matter. The PMA suit seeks a declaratory judgment releasing the company from having to pay costs to defend Penn State in a suit by John Doe A. Mention of the PMA lawsuit is nearly simultaneous with the university’s statement that the General Liability and D&O insurers are expected (by Penn State) to cover those defense costs.

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