Jerry Sandusky is in the clear right now, at least in one respect. His legal bills to defend himself against criminal charges that he sexually abused young boys are being paid by a unit of one of the nation's largest property-casualty insurers, Chubb Corp. And both Chubb and I don't like it.Gavel and Scales of Justice

Chubb went before the judge presiding over the case and cited Pennsylvania law, which bars enforcement of insurance contracts if "certain reprehensible conduct" occurred. But -- for now -- the judge denied Chubb's request, and the insurer could have to pay much more than the $125,000 it's already given to Sandusky and his legal team.

Factor in the 52 separate charges that he faces, including taking private showers with 10-year-olds, and his defense costs will probably run into the millions. If convicted, Sandusky could supposedly have to pay back the money. But I think they'll need a good enforcer to collect if Sandusky is in jail and the money is spent.

Children in need

By now, most of us know that Sandusky ran a charity called "The Second Mile," which was supposed to help children in need. Like other charities, The Second Mile purchased insurance. In this instance it purchased directors and officers (D&O) insurance. This insurance is intended to protect key personnel against alleged judgment errors, breaches of duty and wrongful acts that occur during organizational activities.

Here's my quandary: Sandusky may be unworthy of anyone's sympathy, and I don't see anyone starting a fund to pay his legal expenses. But there are hundreds of thousands of decent people in the United States backing up worthwhile organizations like the Little League and Red Cross. Without D&O insurance, they couldn't serve on any of these organizations in any capacity. There are too many TV lawyers out there waiting to sue them.

In The Second Mile case, insurance pros tell me that there are more than 65 board members who could be sued as a group and individually for their service to the foundation thanks to Sandusky. Most of these people were only trying to help these children. And it's doubtful that the $9 million left in the charitable foundation coffers could even begin to cover all the legal suits and settlements likely to result from Sandusky's alleged transgressions.

But there has to be a clear distinction as to who can buy a D&O policy and for what purpose. Should a drunken CEO who's had his way with a female employee (and there have been a few) be able to demand that the insurer cover his legal defense fund? Doesn't this kind of slush fund aid and abet illegal behavior?

Don't fence me in

Sandusky's trial is taking place in Pennsylvania, which wisely fenced out what D&O policies should not cover, such as "certain reprehensible conduct." And even though Chubb argued that what Sandusky did was certainly reprehensible, the judge was unconvinced. The judge wanted to know if Sandusky was the one who bought the policy and whether he did it knowing he was going to be charged.

Good questions. Hopefully Chubb will come up with good answers. But in the meantime, as Sandusky's attorney says, the judge's ruling has "broad public policy implications" for all the directors and officers with similar insurance policies. It's not a "Get out of jail free" card yet, but it could be.