Horace Mann Sues AIG Insurers Over Denial of Abuse Coverage

New York City prep school Horace Mann sued units of American International Group Inc. saying they refused to defend and indemnify the school for damages stemming from sex abuse claims by former students against teachers.

The Bronx school sued AIG’s Granite State Insurance Co., New Hampshire Insurance Co. and Chartis Claims Inc. today in New York State Supreme Court in Manhattan, seeking more than $1.05 million in compensatory damages.

“The defendants breached their duty of good faith and fair dealing by repeatedly placing their own interests ahead of their insured’s interests and by refusing to attend the mediation or participate in the settlement of the underlying claims,” the school said in a court filing.

Bronx District Attorney Robert T. Johnson said in April that the alleged sexual abuse of students at the prep school took place between 1962 and 1996 and falls outside the state’s statute of limitations.

Johnson’s office began a probe of the allegations after they were reported in the New York Times magazine in June 2012, setting up a hotline for victims and others, communicating with Horace Mann administrators and reviewing the school’s abuse reporting policies and procedures.

School officials issued an apology on May 24 for the alleged abuse of students by teachers and administrators without consenting to an inquiry sought by victims, and said mediators will prepare an independent summary of the reported sexual abuses, without naming the more than 30 alumni who described encounters.

The board of trustees and head of school Thomas Kelly agreed to mediation, and settlements have been reached with the majority of the individuals who came forward without resorting to litigation, the school said in May.

Jon Diat, a spokesman for New York-based AIG, didn’t immediately return a telephone call seeking comment on the suit.

The case is Horace Mann School v. Granite State Insurance Co., 652752/2013, New York State Supreme Court, New York County (Manhattan).

(Editors: Charles Carter, Mary Romano)