Risk management must be an intentional process for the Business Office. It must be as much a part of your workflow as managing finances or facilities.
A primary way to protect your school from risk is through insurance policies. As the office primarily responsible for selecting and buying insurance, how can you confirm that your policy truly transfers risk and provides the protection you’ve paid for?
You must ask specific questions when reading your insurance policies to know what is covered—and what isn’t.
The following questions directly relate to your school’s Directors & Officers policy. However, these can (and should) be asked of almost any insurance policy.
Start by looking at your policy’s declarations page and ask the following:
- What does the policy say it covers in regard to people, buildings, vehicles, facilities, liability and negligence, disability, etc.?
- What is the stated coverage period?
- What are the policy limits?
- What are the deductible, retention (retained risk), and coinsurance, if any?
- How does the policy define a claim?
- How does the policy define a loss?
- How is a claim triggered? In other words, what process sets the policy in motion?
- What, if any, portion of the coverage is limited?
- What is specifically excluded?
- How are legal costs handled? Are additional limits set above and beyond the policy maximum to cover legal costs, or do they actually reduce your limits?
- Are there any endorsements that add to or take away from your coverage?
- What are your responsibilities as an insured?
- How can you terminate coverage? How can the company?
Make sure you ask these questions about your policy so you are fully informed about what’s covered. Risk transference through an insurance policy is a powerful risk management tool—if used effectively.
Your insurance broker should be able to answer these questions and provide clarity in certain areas if needed. But, in the end, this transaction is your office’s responsibility—you must know the right questions to ask.
Additional ISM Resources:
The Source for Trustees Vol. 16 No 5 Why You Can’t Afford to Be Without D&O Insurance
The Source for Business and Operations Vol. 16 No. 9 Insurance You Want Your Vendors to Have
Additional ISM resources for Gold members:
I&P Vol. 41 No. 4 Risk Management Assessment: Reduce Your School’s Exposure
I&P Vol. 35 No. 9 How to Scrutinize an Insurance Policy
I&P Vol. 41 No. 7 Selecting Your Insurance Broker
