Question

Adventure Quest, Inc., a nonprofit school, was founded and operated by Peter Drutchal, its executive director and only full-time employee. From 1994 to 1996, Adventure Quest had liability coverage with Virginia Surety Company. The insurance policy included a "sexual abuse endorsement" that provided coverage for sexual abuse claims, but excluded from coverage any person or entity that personally participated in committing any sexual abuse. When Drutchal completed Adventure Quest's application for the insurance policy, he answered "no" in response to the question, "Have you ever had an incident which resulted in an allegation of sexual abuse?" In fact, Drutchal had previously sexually abused Adventure Quest's students, and additional abuse occurred during the coverage periods of the insurance policy. He kept the abuse secret from others until 2001. Drutchal's sexual abuse occurred in the course of school activities, while Drutchal was acting in his capacity as coach and chaperone. Drutchal's acts of sexual abuse were for his own purposes. The abuse was not done within the scope of his duties or authority as executive director and was not done in the best interests of Adventure Quest. Virginia Surety refused to pay for Adventure Quest's liability for Drutchal's abuse, arguing that Drutchal's knowledge of his own previous abuse was imputable to Adventure Quest, thereby excluding it from the policy's coverage. Was Virginia Surety right?



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  • CreatedJuly 16, 2014
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