Georgia court throws out $345 million award against Darlington School's insurers
Georgia's appeals court has overturned a $345 million award against four major insurers, ruling that policies cannot cover harm that predates them.
The March 6, 2026 decision by the Court of Appeals of Georgia reversed findings against Philadelphia Indemnity Insurance Company, Continental Casualty Company, The North River Insurance Company, and Zurich American Insurance Company - and it turns on a straightforward but consequential question that the court answered with equal clarity: an insurance policy simply cannot be held responsible for harm that occurred long before it ever existed.
The case traces back to the Darlington School, a private institution in Georgia where a teacher named Roger Stifflemire sexually abused at least 20 boys between 1974 and 1994. Despite several victims reporting the abuse to faculty and school leadership as it was happening, Darlington did nothing – no investigation, no termination, no warning to other students or families. The abuse continued for two decades.
The school's silence held for years after that as well. It was not until May 2017 that Darlington sent a letter to alumni acknowledging it had been made aware of one instance of abuse. Former students began filing lawsuits, and by 2020 a total of 20 plaintiffs had brought claims against the school and Stifflemire. The cases were consolidated in Floyd County Superior Court.
Darlington eventually settled with the plaintiffs for $351 million, contributing only $6 million of that amount itself. The school had notified its insurers when the lawsuits began, but the insurers declined to provide a defense, saying the claims were not covered under their respective policies. Faced with defending itself alone, Darlington settled and then assigned its rights against its insurers to the plaintiffs, effectively handing them the ability to go after the insurance companies directly.
The plaintiffs did exactly that, adding the insurers to the lawsuit and arguing that the companies had wrongly refused to defend and pay for the claims. The trial court sided with the plaintiffs and allocated the damages across five insurers, with Philadelphia Indemnity bearing the largest share at $232 million, followed by Zurich at $92 million, North River and Great American at $10 million each, and Continental at $1 million. Great American withdrew its appeal before the case was heard in oral argument, leaving the remaining four carriers to press their cases – and ultimately prevail.
The theory that convinced the trial court was that even though the abuse itself happened in the 1970s and 1980s, the victims' mental anguish continued well into the years when the insurance policies were active. On that basis, the trial court concluded that the ongoing psychological harm qualified as a fresh injury occurring during each policy period.
The appeals court found this reasoning fundamentally flawed. An injury can only come into existence once. The fact that pain and suffering persist over many years does not mean the injury is born anew each year. Accepting that logic, the court observed, would mean that any insured who suffered a harm could claim coverage under every future policy they ever purchased, indefinitely. That is not how insurance works, and it is not what these policies said.
Each of the policies at issue – spanning commercial general liability, umbrella, excess, and certain claims-made specialty coverage – required that the relevant harm occur during the policy period. For most of these insurers, their policies did not even come into existence until the 1990s at the earliest, years after Stifflemire had left Darlington and the abuse had ended. Philadelphia Indemnity's policies ran from 2010 through 2020. Zurich's covered 1996 through 2010. North River's ran alongside Zurich's from 2006 to 2010. None of these windows came anywhere close to the years in which the abuse took place.
Continental was the only insurer with a policy that overlapped at all with the relevant period, covering September 1975 through September 1976. Even then, the only victim who might have fallen within that window testified in his deposition that the abuse began during his eighth-grade year, which would have placed it in the 1980s – outside the policy period. With no evidence that any injury occurred while the Continental policy was active, coverage did not attach there either.
The court also took issue with how the school's conduct was characterized for coverage purposes. Several of the policies defined a covered event as an accident – something unexpected and unintended. Darlington's behavior, as the plaintiffs themselves had alleged, was anything but accidental. The school knowingly failed to act, actively concealed the abuse, and misrepresented to families that it was aware of only a single allegation. Conduct of that nature does not fit within the ordinary meaning of an accident, and therefore does not trigger coverage under policies that require one.
Philadelphia Indemnity had also issued a specialized endorsement designed specifically for sexual abuse vicarious liability that provided coverage for damages arising from abusive conduct for which the school could be held responsible based on its negligent employment, selection, supervision, or retention of an employee. While that endorsement was more favorable to the plaintiffs than the standard policy exclusions, it still required that the harm occur during the policy period. It also defined all acts of abuse – regardless of how many victims or how many years they spanned – as a single event deemed to have taken place at the time of the first act. That provision alone placed the entire pattern of abuse squarely in the 1970s, outside any of Philadelphia Indemnity's coverage windows. The endorsement also contained an explicit exclusion for conduct that predated the policy's inception and merely continued into the policy period, which is precisely what the plaintiffs were describing.
The plaintiffs raised one further argument, contending that Darlington's 2017 alumni letter – the school's first public communication about the allegations – caused its own fresh wave of psychological harm and should be treated as a new, independent injury occurring within the policy period. The court rejected this as well, finding that any distress caused by the letter still arose from the same underlying negligent conduct, and there was no basis to treat it as a separate insured event.
Philadelphia Indemnity had also issued a set of claims-made management liability policies covering directors and officers as well as employment practices. Unlike occurrence-based policies, claims-made coverage is triggered when a claim is actually filed rather than when the underlying events occurred, meaning those policies could in theory have responded to lawsuits filed years after the fact. The court acknowledged as much. But those policies contained an exclusion for claims arising from dishonest, fraudulent, or criminal acts where a final judgment had established the insured's liability. Because the consent judgment against Darlington encompassed precisely that kind of conduct — fraud, concealment, and criminal wrongdoing – the exclusion applied across the board, regardless of how the individual claims had been framed.
With the reversal of the damages award, a separate appeal over the size of the bonds the insurers had been ordered to post while the case was pending became moot, and the court dismissed it accordingly.
The decision carries practical weight well beyond this single case. Waves of institutional abuse litigation have been working their way through courts across the country, many of them involving conduct that took place decades ago and insurers whose policies were issued long after the fact. The Georgia court's clear articulation of when occurrence-based coverage is – and is not – triggered by continuing psychological harm gives the industry a firm precedent to point to as those disputes continue to multiply.
