Q: Our school carries several insurance policies. We’re trying refocus our risk management protocols. Is there one insurance policy that you think is essential?
A: There’s an old insurance adage: “The best ‘insurance’ is to not have a claim in the first place.” This is especially true for exposures and claims covered by Directors & Officers liability, possibly your most important insurance policy. Risk management, or claims management, is critical to avoid or mitigate these risks.
Beyond insurance, training and education are other key elements in the risk management process. Topics for training faculty and staff should include defining harassment/misconduct, hiring and firing, how and when to conduct job evaluations, dispute resolution, handling disciplinary issues (both employee and student), and the like.
Another approach to controlling exposure in this complex area—and one which clearly has additional positive and significant outcomes extending far beyond this topic—is creating a culture of caring, support, and predictability through having a written (and followed) employee handbook. This document should have clear protocols for various situations. So, too, can a parent/student contract help to reduce “surprises” and unmet expectations, and therefore claims.
Even with these practices in place, “bad things” can still happen. The following list represents some of the most important exposures you have and, therefore, should be certain are covered in your policy.
- All manner of Employment Practices Liability including: wrongful termination, wrongful hiring, discrimination, harassment and misrepresentation
- Entity coverage (should the school be sued)
- Duty to defend (claims when first brought)
- Defense costs in addition to the limits
- Right to settle or not settle (school’s right to decide when to settle)
- Punitive damages (where allowed by state)
- Third-party discrimination for nonemployees (e.g., parents)
- Sexual misconduct coverage/workplace violence coverage
- Internet liability coverage/fiduciary coverage
- Educational wrongful acts coverage (response to a claim of breach of contract, as most private schools are subject to contractual law rather than constitutional law)
Remember, as a school leader, D&O insurance MAY be the most critical insurance and protection you provide to your school, and all those who are part of your school.
It is your agent’s job to help you to know and think about all of this. Contact her/him and your insurance company as you work through this process. Have them sit with you to review your policy so that you can ask questions and truly know what is—and is not!—covered.
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