School days, school days, good old risk exposure days
By David Thamann
With the beginning of another school year, the concerns of parents over how to pay for their childrens' education and whether the children are getting a solid education are most probably matched by the concerns of the schools over how to keep the children safe. Today, children in school have their safety threatened by, among other things, weapons, sexual molestations and harassments, and general premises risk exposures. Should a child be injured by a weapon or molestation, or by simply a fall down the school stairs, the end result is usually a lawsuit being filed by the parents against the school. So, how does the school protect itself against such risk exposures?
Many insurance companies offer policies designed to address the specific risk exposures that schools and universities face. However, such policies are based on the standard general liability policy and 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, it should be noted 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. In other words, there is not going to be any insurance 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 owned by a company hired by the school to transport students. This endorsement also excludes coverage for injury or damage caused by the rendering of or failure to render medical, dental, or nursing service, treatment, advice or instruction; this 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 about if the injury is due to an out-of-the-ordinary event?
As an example, a student or some other person brings a weapon on school premises and proceeds to shoot faculty members and students. Events like this at Columbine and Virginia Tech 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; but if the school is held liable, there is no exclusion in the general liability policy that would prevent coverage. Moreover, even if the school is held not liable, the defense costs can be high and the liability policy will pay those expenses.
As another example, what if a student is sexually harassed or molested on school premises, either by a faculty member or another student? Here 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, there are two points to 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 any person while in the care, custody, or control of any insured. And, coverage for injury arising out of the negligent employment or 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.)
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, with 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, as the Virginia Tech shootings show, if the school has counseled a student and found him to be disturbed or a possible threat to himself or others, and the school does nothing, the school could be held responsible for any future injuries and damage that student causes. The general liability policy will provide defense and, if necessary, indemnification for an insured school in such a 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 or similar services. Any school or college that offers counseling services to students needs to be wary of such exclusionary language in its general liability policy.
As for overseas travel, some schools sponsor student trips overseas for educational purposes, sometimes accompanied by faculty members and other times not. As an example, the 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. These circumstances mean the following as an example: 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 (whatever that phrase means) 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.
In sum, there are many liability issues that schools and colleges need to face when it comes to the safety of the students. There are on-premises and off-premises exposures to be analyzed and appropriate risk management actions to be taken. And, the realities of today's risks do not give schools too much time to act.
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