Classroom Claims

While both public and private educational institutions face many of the same types of claims, the climate is arguably more hazardous for private institutions—which don't enjoy the liability protections afforded to government entities in many states.

Additionally, private schools have increased their exposure as they've expanded both their academic and extracurricular programs to better compete for students.

“Private schools have added more travel exposure in particular, including travel abroad, in the K-12 grades that we hadn't seen before,” says Deb Denker, industry manager in the education sector at Travelers. “They're not just sightseeing; they're doing service and other activities that increase exposure to injury.”

“Schools have had foreign travel exposure for some time, but they haven't faced it well,” observes Ric Valentino, director of the education practice at agency RCM&D in Baltimore. “They haven't had the right protocols for keeping both students and parents informed about risk, haven't always had the right coverage in place, and in some cases haven't gotten the right permissions.”

Travel Leads to Large-Ticket Losses

Earlier this year, a Connecticut jury awarded $41.7 million to Cara Munn, former student of Hotchkiss School in Lakeville, after a tick bite suffered on a 2007 school trip to China caused her to contract a case of encephalitis, which makes it difficult to speak or swallow. The school, which declined to comment on the case while it is appealing the award, was faulted for not specifically warning Munn and her parents that she would be traveling to a tick-infested area and how to adequately protect herself.

“The issue here is that these private K-12 schools aren't used to all of the risk assessment you need to go through when you're sending students out, particularly minors where the school's duty is much greater than when you have adult students going,” says Denker. As a result, both carriers and brokers are fielding more questions from schools around potential claims related to travel.

“We are seeing schools that do international travel buying foreign coverage to address the exposure,” says Mary Williams, vice president of Willis of Pennsylvania. “We're making sure it's covered in the umbrella programs we offer as well.”

Abuse and molestation claims are also on the rise. “We've seen more reported allegations of abuse in the last 18 months than in the last 25 years,” claims Reid Sandner, executive vice president, Willis of Pennsylvania. “In the past, if we asked for $1 million cover for abuse or molestation, it was no big deal. Today carriers are asking for training and background checks for employees and volunteers. They are asking if there are age-appropriate discussions with students around abuse. We're seeing a lot more awareness by schools of the potential for claims.”

Sandner attributes part of the rise in claims to states' expansion of the statutes of limitation for reporting incidents. Denker says that public awareness of abuse has also driven increased reporting.

“There is much more press about it—it's not shoved under the rug as it might have been in the past,” she notes, adding that the type of abuse claim activity has also been changing.

“A lot of 'child-on-child' claims are becoming more common in addition to the traditional employee/teacher and child,” she says. “Even if allegations are proven to be false, you still have defense costs to contend with.”

An increase in awareness is also behind a growth in claims under educators' professional liability coverage for failure to educate, which has led to 50 percent or greater premium increases and doubling of deductibles on the line.

 “This particular issue is more prevalent in our region of our country, which is very litigious,” says Williams of the Keystone State. “There is a group of attorneys here that is really pushing these cases.”

Traditional Losses Still Dominate

Although abuse claims may garner headlines because of their sensational nature, frequency of claims remains highest in the traditional areas of bodily injury in both auto and GL from accidents, workers' compensation, and property.

“It's still slips, trips and falls. It's still playground injuries. Those are the areas that produce a constant stream of claims,” says Williams.

“Our worst claims involve auto, particularly in private schools where [you don't have] the immunities and caps on liability and damages,” Sandner adds.

In property, Travelers reports seeing weather claims pop up in unexpected locations in recent months.

“We always have claims in the traditional wind, hail, and tornado zones, but we are now getting weather events in areas we typically haven't, such as inland Texas where there isn't a coastal exposure,” says Robin Leal, underwriting director in Travelers' public services division. “And, the amount of damage when severe weather happens tends to be significant because of the design and construction of many school buildings.”

Indeed, since many schools have flat roofs, they are particularly susceptible to water leakage from storms or loss to roof-mounted equipment resulting from straight-line winds. Also, the age of many of those buildings presents several challenges for schools, including maintaining adequate replacement cost values and the increased expense of bringing damaged structures up to code.

As Valentino points out, “The problem in the Northeast is that schools tend to be in historic buildings. Property policies may not provide the right protection without endorsements. Schools need to understand the uniqueness of their properties and establish the appropriate risk transfer with their insurance company.”

The one thread shared among any type of educational institution is that the risks they face continue to multiply, adds Denker. “Every time you turn around, there seems to be a new exposure or a new challenge to work on.”