Protecting schools from risk exposures.
Many insurance companies offer policies designed to address the specific risk exposures facing schools and universities. However, these policies are based on the standard general liability policy, so it is appropriate to discuss that policy with reference to the coverages it supplies, and denies, to schools.
When it comes to the ordinary premises liability exposures, schools can take comfort in knowing that the general liability policy will pay "those sums that the insured becomes legally obligated to pay as damages because of bodily injury or property damage" to which the insurance applies. In other words, if the student is injured by tripping over a broken sidewalk on campus or by receiving an electrical shock while using school utilities, the general liability policy will provide coverage for the school if a lawsuit is brought against it by the student or his parents; there is no exclusion in the policy to prevent the coverage.
However, while ordinary premises liability exposures can be covered under a general liability policy, note that the Insurance Services Office (ISO) has mandatory endorsements that must be attached to a general liability policy that insures a school. CG 22 71, Colleges or Schools (Limited Form), is an endorsement that excludes any coverage for bodily injury or property damage arising out of the ownership, maintenance, operation, use, loading or unloading, or entrustment to others of any auto that is owned, operated or hired by any insured. And, for the purpose of this exclusion, the word "hired" includes any contract to furnish transportation of students to and from schools. Meaning there will not be any coverage for a claim of injury to a student while being bussed to and from school, whether the bus is owned by the school or by a company hired to transport students.
This endorsement also excludes coverage for injury or damage caused by providing or failing to provide medical, dental, or nursing service, treatment, advice or instruction. This also includes the related furnishing of food or beverages, the dispensing of drugs or medical supplies, and any health or therapeutic service or treatment. Med pay expenses for bodily injury to students are excluded and bodily injury to any person while participating in any sports or athletic contest (if there is no direct management, organization, or supervision by an insured) is also not covered. Endorsement CG 22 72 is similar to CG 22 71 except that med pay coverage is allowed.
So, while the ordinary premises liability exposures can present few problems for an insured school or college, what if the injury is due to an out-of-the-ordinary event?
For example, a student or some other person brings a weapon on school grounds and proceeds to shoot faculty members and students. Similar events show that the school will be sued for the deaths and injuries. The key question is whether the insured school is legally liable for the bodily injuries. If the school is held liable, there is no exclusion in the general liability policy that would prevent coverage. (Even if the school is held not liable, the defense costs can be high and the liability policy will pay those expenses.)
What if a student is sexually harassed or molested on school premises, either by a faculty member or another student? Again, the school or college has to be found legally liable for any claimed injury to be covered under the liability policy, but if this is the case, there is no exclusion to prevent coverage. However, two points should be noted.
First, the injury has to entail bodily injury as defined in the liability policy; pure mental stress or embarrassments are not injuries covered by the standard general liability policy. Second, there is an endorsement that many company underwriters can attach to a liability policy where the possibility of abuse and molestation is relatively high, such as a school. CG 21 46, Abuse or Molestation Exclusion, prevents coverage for bodily injury and property damage arising out of the actual or threatened abuse or molestation by anyone of an individual while in the care, custody, or control of the insured. Coverage for injury arising out of the negligent employment, supervision or retention of any person for whom any insured is or ever was legally responsible is also excluded. (While the care, custody, or control part of this exclusion is more pertinent to a primary or high school rather than a university, the endorsement is important to note.)
Counseling Services & Overseas Travel
There are two other areas of concern that merit mention in this discussion: counseling services and overseas travel.
Some universities and high schools provide counseling services to students on topics ranging from normal educational pressures to drug and alcohol abuse. If this counseling results in a student's bodily injury, the school has opened itself to a potentially expensive lawsuit. In fact, if the school has counseled a student and found him to be disturbed or a possible threat to himself or others and done nothing, the school could be held responsible for any future injuries and damage the student causes.
The general liability policy will provide defense and, if necessary, indemnification for an insured school in this situation unless there is some relevant exclusion in or endorsed onto the policy. For example, CG 21 57, Exclusion--Counseling Services, is an endorsement that prevents coverage for bodily injury, property damage, or personal and advertising injury arising out of advisory services or counseling with respect to such issues as mental health, crisis prevention, social services, or drug and alcohol rehabilitation. Any school or college that offers counseling services to students needs to be wary of such exclusionary language in its general liability policy.
As far as travel, some schools sponsor student trips overseas for educational purposes that may or may not be accompanied by faculty members. Say a university sponsors a study tour in Mexico or Europe and a student is injured while on tour. Is the school responsible for this injury, either by simply being the sponsor or by having the injury caused by the accompanying faculty member? Even if the school is held responsible for the injury, the fact is that for general liability coverage to apply, the injury has to occur in the coverage territory as defined in the policy. It is true that "coverage territory" can include all parts of the world, but this comes with limiting circumstances.
First, all parts of the world are included as the coverage territory if the injury or damage arises out of the activities of a person whose home is in the U.S. (or Canada) but is away for a short time on the business of the named insured. Second, the insured's responsibility to pay damages has to be determined in a lawsuit filed in the U.S. This mean the accompanying faculty member responsible for the injury to the student has to be a resident in the U.S. and considered away from the school for a short time on the business of the school. Also, a lawsuit filed against the insured to determine responsibility for the injury has to be filed in the U.S. A lawsuit filed in Mexico or Europe is not going to satisfy the coverage territory requirements.
There are many liability issues facing schools and colleges when it comes to student safety, and on-premises and off-premises exposures should be analyzed and appropriate risk management actions taken.
David D. Thamann, JD, CPCU, ARM, is managing editor for FC&S, a sister publication of PropertyCasualty360National Underwriter and part of Summit Business Media. He may be reached at firstname.lastname@example.org.