Penn State Lawsuits: Insurance Coverage Battles Begin

This was more likely than Eli Manning coming through in the clutch: insurance companies running for the hills in the Penn State lawsuit flood that has already started. Pennsylvania Manufacturers’ Association Insurance (PMA) has filed a declaratory judgment lawsuit disclaiming coverage in allegations that Gerald Sandusky sexually molested children. Penn State claims coverage.

In the 16-page complaint, PMA argues that only the 1991 or 1992 policy is triggered, but, if it is the latter policy, coverage is precluded under that policy’s abuse or molestation exclusion.

I think there are two levels on the insurance coverage question in the Penn State lawsuits. First, was this a coverage act, or did the policy exclude intentional torts of employees or agents?

Second, both metaphorically and practically, these cases are like toxic tort lawsuits, like lead paint and asbestos. A big issue will be who was on the insurance coverage and when they were on this risk. When did the injuries occur and how should the insurance coverage get split up when there are multiple insurers on the risk? Multiple triggers, pro rata coverage, and all of these issues come to the forefront in these battles.