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Penn State sues insurer PMA over nonpayment of abuse victims' claims

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Penn State sues insurer PMA over nonpayment of abuse victims' claims

Pennsylvania State University has filed a lawsuit against its insurer, Pennsylvania Manufacturers' Association Insurance Co., for refusing to cover claims made by 30 men in connection with the child sexual molestation abuse allegations against former football assistant coach Gerald A. Sandusky.

The latest suit, filed last week in the Court of Common Pleas of Centre County in Bellefonte, Pa., alleges that PMA failed in its obligations owed to the university under commercial general liability insurance policies to cover claims in lawsuits filed against the school regarding Mr. Sandusky's misconduct.

Penn State purchased CGL polices from PMA for consecutive 12-month periods for more than 50 years, according to the suit.

Penn State said that in addition to the claims filed by the 30 men against the university, it anticipates more claims in the future alleging improper conduct by Mr. Sandusky that may trigger coverage under one or more policies issued by PMA, according to court documents.

Most of the PMA policies contained a $2 million per-occurrence limit and a $3 million aggregate limit. One policy had a $2.5 million per-occurrence limit and a $2.5 million aggregate limit, according to the suit.

As of February, six civil lawsuits have been filed against the university, Penn State said on its website.

“By refusing to honor its obligations to provide full coverage to Penn State, PMA has essentially abandoned a decades-long client,” a Penn State spokesman said in an email. “Penn State will aggressively pursue the coverage for which it has paid over $23 million since 1983 and to which it is entitled.”

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“The university continues to believe its general liability and directors and officers insurance policies will cover the defense of claims brought against the university and its officers, employees and trustees,” he said, noting that student tuition, taxpayer funds or donations will not be used.

Blue Bell, Pa.-based PMA in 2012 filed for declaratory judgment that Penn State is not entitled to coverage and a defense under certain policies issued by the insurer. Penn State countersued PMA for refusal to provide coverage in connection with a 2011 civil lawsuit.

Mr. Sandusky, a former defensive coordinator with Penn State's powerhouse football program, received a 30- to 60-year sentence after being convicted in June 2012 for sexually molesting 10 boys.

Penn State demands a jury trial and seeks compensation for PMA's alleged breaches of contract, according to the suit.

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