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State Farm Gets Stuck With Sandusky’s Legal Fees, Wants Out

Posted by Phoenix Personal Injury Attorney Nick Alcock:

State Farm Fire and Casualty Company perviously sold a homeowner policy to disgraced Penn State Defensive Coordinator and convicted child molester, Jerry Sandusky. Last week the noted Insurer filed a federal lawsuit to get out of paying Sandusky’s considerable legal bills. The lawsuit argued that the policy does not cover injuries caused by intentional, willful or malicious acts. The State Farm policy provided only limited personal liability coverage.

Sandusky bought a fairly typical home insurance policy from State Farm in 1985. When the sexual abuse scandal broke, Sandusky sought to utilize his insurance to pay his legal bills from both his criminal and civil cases. State Farm initially declined to cover the criminal matter, but did pay for Sandusky’s civil bills. The insurance company is now seeking a declaratory judgment from a court stating that it doesn’t have to pay for any of Sandusky’s bills, civil or criminal.

Home-insurance policies generally include a personal-liability coveragethat helps policy holders with their legal defense costs. This can include covering the costs of lawsuits in matters like a dog bite or a slip and fall on the homeowner’s property. However, these policies usually have limits and do not cover criminal matters or willful acts of misconduct. In its lawsuit, State Farm argues that its policy specifically excludes bodily injuries resulting from “intentional acts” and seeks to be excused from covering any of Sandusky’s bills.

Additionally, the insurance company argues that it does not cover “business activities,” and as Sandusky is being sued in his official capacity as principal at his charity the Second Mile, the charity Sandusky founded for at-risk youth in 1977, the home insurance company should not cover these activities. Similar to State Farm, Second Mile’s insurance company, Federal Insurance Company, is also seeking declaratory judgment to get out of paying Sandusky’s bills.

Sandusky, 68, was convicted last month on 45 counts of sex abuse involving 10 boys, sometimes at his home in State College, Pennsylvania. The National Collegiate Athletics Association (NCAA), the governing body of U.S. college sports, has since fined Pennsylvania State University $60 million in an unprecedented rebuke for the school’s failure to stop Sandusky’s sexual abuse. In a sign of potential financial fallout from the NCAA move, Moody’s Investors Service said it might cut Penn State’s Aa1 revenue bond rating.

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