New Hanover Board of Education sues insurance companies over coverage in Kelly case

The board filed the lawsuit against The Netherlands Insurance Co., Peerless Insurance Co., Liberty Insurance Corp., and Liberty Mutual Fire Insurance Corp.
Published: Nov. 1, 2021 at 8:35 PM EDT
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NEW HANOVER COUNTY, N.C. (WECT) - The New Hanover County School Board has filed a lawsuit against several of its insurance carriers in a dispute over how much coverage the companies will provide to the board in the case involving former teacher Michael Kelly. Kelly is in prison after pleading guilty in 2019 to nearly 60 sex crimes charges, which included sexual exploitation of minor, indecent liberties with a student and indecent liberties with a child.

The school board is one of the defendants in a civil lawsuit brought by individuals Kelly victimized while teaching in the New Hanover County Schools. The board filed the lawsuit against The Netherlands Insurance Company, Peerless Insurance Company, Liberty Insurance Corporation and Liberty Mutual Fire Insurance Corporation. Also listed defendants are ‘John Does 1-13′, the plaintiffs in the civil suit against the school board, Kelly, former superintendent Tim Markley and former assistant superintendent Rick Holliday. The ‘John Does 1-13′ are included as defendants in the school board’s action against the companies because the lawsuit spells out they are ‘necessary parties interested in the outcome of this action’ because it could determine any damages recoverable by law.

The new lawsuit says the insurance companies have taken the position only $4 million dollars of coverage applies for the school board in the Kelly case. The board contends that claims triggering coverage by the companies cover policies over several years and should result in a larger amount. The school board is seeking to have The Netherlands Insurance Company pay up to $18 million in loss or damages assessed to the school board in the civil action, Liberty Fire Insurance Corporation pay up to $6 million, Peerless Insurance Company pay up to $3 million, and Liberty Insurance Corporation pay up to one million, for a total of $28 million in coverage.

WECT requested copies of annual insurance premiums paid by New Hanover County Schools. The summary showed a total of more than $1.2 million.

Annual insurance premiums paid by NHC Schools
Annual insurance premiums paid by NHC Schools(WECT)

New Hanover County School Board Chair Stefanie Adams released the following statement regarding the lawsuit filed against the insurance companies:

“The Board of Education filed an action seeking to ensure it receives the full coverage to which it is entitled under its existing insurance policy to support its efforts in resolving ongoing litigation.

The trail of devastation left by Michael Kelly in New Hanover County is abhorrent. Sexual assault is a trauma no one should endure and has no place in our schools and community.

The Board of Education respects the privacy of the plaintiffs and will not publicly discuss details of the ongoing litigation. I have faith in the legal system to ultimately reach a just resolution. The mediation process is ongoing.

We are now several Boards of Education removed from when these devastating acts took place. Still, the current Board of Education is committed to preventing abuse and providing a safe learning environment for all students. The Board made significant progress in recent years to address awareness and prevention of sexual harassment and abuse and remains fully committed to student safety.

Here are some of the important steps we have taken:

  • Extensive training for students, employees, administrators, and Board members:
  • Shifting Boundaries training for students grade 6-8
  • Bringing in the Bystander program for high school students
  • Over 3,000 employees received mandatory Darkness to Light training
  • All board members trained specifically on how to handle Title IX appeals
  • Robust Title IX Department:
  • A highly qualified Title IX Coordinator, who is a lawyer with expertise in the field
  • A dedicated Title IX Investigator who reports to the Title IX Coordinator
  • Title IX Fact Sheet
  • Improved reporting tools and multiple ways to report that are accessible to students, staff, parents, and the community:
  • Ethix 360 - Secure, anonymous 24/7 reporting system accessible online; access via the “Report a Concern” link on header of every page of NHCS website
  • Say Something - Secure, anonymous 24/7 reporting system accessible through an app, online, and through a hotline.
  • Call 910-254-4200
  • Email:
  • Title IX survey created by the Title IX Committee and approved by the entire Board. It will be administered to all middle school and high school students during the 2021-22 school year by an independent 3rd party who will also analyze the data and issue a report to the Board.
  • Active Title IX Board Committee
  • Title IX Look Back
  • New, updated Board policies specifically addressing Title IX compliance:
  • Policy Code: 1720/4030/7235 Title IX Nondiscrimination on the Basis of Sex
  • Policy Code: 1725/4035/7236 Title IX Sexual Harassment – Prohibited Conduct and Reporting Process
  • Policy Code: 1726/4036/7237 Title IX Sexual Harassment Grievance Process
  • New policies and tools to address appropriate use of technology:
  • Policy Code: 3226/4205 Internet Safety
  • Policy Code: 7335 Employee Use of Social Media
  • Policy Code: 3225/4312/7320 Technology Responsible Use
  • Gaggle Student Safety Management Tool

We are dedicated to keeping ALL of our students and staff safe and do not take this obligation lightly.”

WECT will continue to update this story as more information becomes available.

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