A recent spate of complaints and penalties assessed against universities for violations of the Clery Act, which requires qualifying colleges and universities to keep and regularly disclose information about crime on and near their campuses, is yet another reminder that higher education institutions should look for Educators Legal Liability (“ELL”) coverage that is closely tailored to their unique needs.

Students at four major universities (Dartmouth College, Swarthmore College, the University of Southern California and the University of California, Berkeley) have recently filed federal complaints with the U.S. Department of Education (DOE) alleging that their schools had violated the provisions of the Clery Act.

The provision is named after Jeanne Clery, a Lehigh University freshman who was raped and murdered by a fellow student in her residence hall in 1986. Following her death, Clery's parents argued that better information about crime and safety statistics at Lehigh would have weighed in their decision to enroll Jeanne at Lehigh in the first place—or at the very least would have prompted the young student to be more careful while at school. Their campaign for increased transparency culminated in the signing into law of the Jeanne Clery Disclosure of Campus Security Policy and Campus Crime Statistics Act in 1990.

For colleges and universities, the costs of non-compliance with the Clery Act are high. The DOE, which is tasked with the enforcement of the act, has the authority to conduct random audits to check compliance and to assess a fine per finding of violation of any provision of the law. In the most extreme cases, should the findings be damaging enough, a school could lose access to various levels of financial aid.

The fines can add up quickly. In May 2013, Yale University was fined $165,000 by the DOE for inadequate reporting of campus crime statistics after a seven-year investigation of Yale's compliance with the Clery Act. In 2008, Eastern Michigan University was fined a record $357,500 for its failure to issue a proper warning on campus following the assault and death of a student in 2006. The assessment of fines by the Department of Education appears to be increasing as the DOE ramps up its Clery Act audit activity.

When securing ELL coverage, colleges and universities should pay close attention to how their policy deals with the Clery Act.

ELL policies routinely include an endorsement that offers a small sublimit for fines and penalties that result from a Clery Act violation. Schools should ensure that the sublimit offered is sufficient for their purposes, particularly following the recent increase of the fine per violation from $27,500 to $35,000. In order to access coverage, schools should also ensure that a Department of Education audit would trigger the definition of a claim under their ELL policy.

A core challenge of risk management is to plan for the unpredictable. While it is impossible to say in advance how coverage would respond to any given situation, colleges and universities should seek to obtain clarity of intent from their D&O carrier. It is particularly important for the increasingly visible issue of Clery Act violations—where current coverage may not be enough.

Bert Spunberg (Bertrand.Spunberg@hiscox.com) is U.S. Executive Risk Practice Leader at international specialist insurer Hiscox.

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Clery Act Complaints Reminder to Keep On Top of University Legal Liability

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