University’s fines and penalties will likely not be covered.
The latest insurance news about the Sandusky sexual abuse scandal at Pennsylvania State University has shown that it is unlikely that the school’s insurer will be covering the $73 million in penalties and fines that have been imposed by the Big Ten Council of Presidents and Chancellors and the NCAA for the failure of the college to handle the allegations of child sex abuse by the former assistant football coach.
Gerald A. Sandusky’s attacks led to unprecedented fines and penalties.
Penn state’s first fines were $60 million from the NCAA, which is the equivalent to the gross earnings of the football program at that college, as well as a postseason ban of four years and a vacating of Penn State’s football wins since 1998. The Big Ten Council, which is responsible for the overseeing of the Big Ten conference of college football has also charged a fine of $13 million to the state.
This became insurance news when it became unlikely that these fines would be covered.
Louis Freeh, a former federal judge and a former FBI director, was the creator of the independent report upon which the two organizations based their fines. Freeh has stated that the money that is collected from these fines will be donated to charitable groups and programs dedicated to the prevention of child abuse.
Insurance news was made when it was believed that the school might look to its insurer to help to cover the fines. However, according to the vice president of risk management for Educational & Institutional Insurance Administrators Inc., John Roskopf, “Generally speaking there is no insurance coverage for these types of administrative fines and penalties.”
A similar assurance was made by Teena Hostovich, the L.A.-based executive vice president of Lockton Cos. L.L.C., who explained that “Fines and penalties are normally not covered,” and that “It is considered against public policy to insure these.”
These insurance news penalties are being faced by the university at the same time that it is in the middle of complex civil lawsuits regarding the conviction of Sandusky on charges of child sexual abuse.