In a move that many people would consider questionable, Bill Cosby moved forward to use an umbrella policy tied to his homeowners’ insurance to pay his legal fees and any potential judgments stemming from the litigation brought against him. This attempt, however, has been challenged by his insurance company, American International Group (AIG), who argues that Cosby isn’t covered because of exclusions for sexual misconduct. In November, a federal judge ruled against AIG and found that the exclusion doesn’t apply because Cosby’s statements, not his alleged sexual misconduct, are the subject-matter of the pending defamation lawsuits (ten women across three states). Since then, AIG has stated that they plan to appeal the ruling and have amended their complaint citing other reasons that they shouldn’t be required to cover Mr. Cosby.
Although people may think Cosby’s attempt to obtain coverage is a unique approach, this is not the first time such an argument has been made on such a public stage. According to Joseph Cammarata, the lawyer who represented Paula Jones in her sexual harassment and defamation lawsuit against Bill Clinton, the former president also enlisted his insurance policies to help pay his legal bills. Mr. Cammarata especially disdains this type of coverage noting that “[i]f the allegations are true, you can harm someone, and get somebody else to pay for your wrongdoing.” It remains to be seen whether AIG will be able to overcome the federal judge’s initial ruling, either by appeal or by amended complaint, but we will surely be following this story for future updates.
Liam Perry is an Associate Attorney at The Loftin Firm. For questions relating to this blog post or any other California real estate, land use, corporate, or estate planning matter, contact The Loftin Firm at 760-814-9649.