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Insurer settles with diocese

An insurance company will pay the Spokane Catholic Diocese $6 million to help settle claims of sexual abuse by priests.

The diocese settlement with Oregon Auto Insurance Co. is the fourth such agreement, which together have raised $16 million so far. Two other insurance carriers have yet to settle coverage disputes with the diocese.

Oregon Auto pledged to pay $5 million once the diocese has a court-approved plan to exit bankruptcy protection and pay sex-abuse victims. Another $1 million will be paid to the diocese in the year 2010.

The insurer provided liability coverage to the diocses from 1972 to 1976, said diocese attorney Shaun Cross.

The settlements mark progress for the diocese, though it is still scheduled for an October trial against carriers CNA and the Washington State Guaranty Association. The Guaranty Association is responsible for the policies of defunct Home Indemnity Co.

Cross declined to speculate on when or if those insurers would settle, and for how much, although CNA was the insurer from 1976 until the 1980s, a period when many of the instances of sex abuse allegedly occurred.

The insurance companies that earlier settled with the diocese include Indiana Insurance Co., for $2.75 million; Aetna Insurance Co., for $1.5 million; and Safeco Insurance subsidiary General Insurance Co., for $5.25 million.

Besides the $16 million in insurance agreements so far, Cross said the diocese expects to earn between $8 million and $10 million from the sale of property and buildings, including its Chancery and about 92 acres of land outside Spokane; and perhaps another $7 million in financing from associated Catholic groups such as the nonprofit Catholic Charities and Catholic Cemeteries.

With all of those sources of funds, the diocese has $30 million essentially in hand to fund the costs of its bankruptcy and pay sex-abuse claims. The total that may be required still isn’t clear.

If further insurance settlements aren’t enough to fund the diocese’s bankruptcy obligations, it may have to initiate a capital campaign to raise funds from parishioners and others or use parish properties as collateral to borrow money.