EDUCATORS’ LEGAL LIABILITY COVERAGE ANALYSIS

(July 2024)

Educators’ Legal Liability (ELL) Coverage is not standardized. This article will discuss policy parts and wording that can be anticipated. Differences in these areas can be significant so careful review is vital when considering switching carriers.

INTRODUCTION

An ELL policy may include an introduction that admonishes that the policy should be carefully read as a whole in order to truly understand how coverage applies. Often, an introduction may also advise that the policy uses defined terms which appear in a definitions section.

INSURING AGREEMENTS

ELL Coverage provided by insurers may have significant differences. It is important to compare what is available to meet the exposures and financial needs of a given educational institution or school district. Different ELL forms may even have substantially different insuring agreements. We found the following among the policies reviewed for this article:

Insuring Agreement A	Insuring Agreement B	Insuring Agreement C
The language in this agreement refers to coverage being provided contingent on receiving the policy premium. It states that coverage is subject to all relevant policy provisions. The carrier also states that the policy issuance is a result of completely relying on the accuracy of the information provided by the applicant/insured. This agreement refers to a Self-Insured Retention.	This company's agreement is worded similarly to the language found in most standard commercial policies. It states that the company will pay on behalf of an insured that faces an allegation of performing a wrongful act. It also states that it will not respond to acts that occur before either the policy's effective date or the applicable retroactive date.	The language in this carrier's agreement is more specific. It refers to paying on behalf of an insured due to liability involving eligible, education operations acts. It also contains wording that reflects its claims-made basis of coverage.

CLAIMS-MADE PROVISIONS

ELL Policies are written on a claims-made basis. Claims-made coverage is triggered by the date that a claim is actually filed or received. Any eligible loss or claim filed within the policy period is handled by that policy, regardless of when the actual loss or injury occurred. Many policies add a further restriction though. In order for a loss to be covered, it must have occurred after the retroactive date on the declarations. This Retroactive Date may be the inception date of the policy, it may be the date on which the Education Legal Liability was first written on claims-made basis or it may be an arbitrary date prior to which the insurance company is not willing to write. A claim presented during the policy year for a loss that occurred prior to the retroactive date is ineligible for coverage. Some additional common provisions or conditions that may apply to a Claims-Made Policy are:

· No coverage applies if prior to the policy period, an insured knew of any actual or alleged wrongful or negligent act, error, omission, or circumstance and anticipated that a claim would be presented under the current policy period.

Example: Several parents sue Mary’s Music Institute when their children are physically abused by a music instructor during their lessons. The Institute’s Educators’ Liability insurance carrier initially handles the suit. Later, the insurer denies coverage. While investigating the claim, the company discovers that the Institute fired the instructor seven months before the policy’s retroactive date. The instructor was terminated due to several complaints about inappropriate conduct.

· The claim must first be made against the insured during the policy period. All claims related to that first claim will carry the claims-made date of the first claim.

Example: Piper Elementary arranged for 30 children to attend a special event. All children who attended were surprised with scholarships. On 3/1/24, a parent of a child who was not selected sued Piper Elementary. Additional parents also filed suit, with the last suit filed on 8/1/25. Piper’s Educational Legal Liability policy term went from 6/1 to 6/1. All claims are considered to have been made as of 3/1/24 and only the policy in effect as of 3/1/21 (6/1/21 to 6/1/22 policy term) would respond.

· The claim must be reported in writing to the company no later than 60 days after the end of the policy period. If the insured purchases an extended reporting period at the termination of the policy, the claim must be reported in writing to the insurer during that period.

Reporting Incentives

An insurer may wish to encourage policyholders to report activities that may result in claims. Some insurers may provide access to personnel for discussing any situation an insured suspects may result in a claim. Another variation is an insurer who provides a limited amount of coverage for the expense of reviewing potential loss situations. Coverage is usually modest, say $5,000 or so, but it is a way to encourage early and consistent reporting of possible losses.

Related Court Cases:

Law Firm’s Failure to Give Notice During Policy Period When Claim Was Made Negated Coverage

Notice Requirements of Claims-Made and Occurrence Policies Distinguished

Retroactive Date Inception Placed Claim Against Attorney Outside Scope of Coverage

Retroactive Date Identical to First Day of Policy Effectively Eliminated Coverage for Prior Acts

WHO IS AN INSURED

The entity or organization that appears in the Declarations is the named insured. Additional parties and entities are considered insureds but only when acting within the scope of their duties that are related to the named insured.

Compare policies to see which of these are considered insureds:

· Directors and officers of the institution’s governing body

· Members of boards, commissions, councils, and committees

· Elected or appointed officials, trustees, directors, or superintendents

· Employees, including student teachers, teaching assistants and substitute teachers

· Authorized volunteers, including students

· Students of the named insured while participating in internship programs or while conforming with insureds’ conduct/behavior codes

Example: Kelly is a student at High Achievers Plus Academy. Her tuition is partially offset by her internship in the High Achievers’ Admissions Office. One day she answers a call from a parent of a student to formally accept a full academy scholarship. She forgets to pass the message on to anyone else in the office. This error results in the scholarship being given to another student. The parents of the student who lost the scholarship sues High Achievers and Kelly for the value of the lost scholarship.

These entities are covered as insureds only for acts that take place while they are performing within the scope of their duties to the named insured.

Example: Kelly is a student at High Achievers Plus Academy. She pays for some of her tuition by working part-time at Mavis and Marvin Office Services. One day she answers a call, takes a message, and forgets to pass it on to Mavis. This error results in Mavis losing a very important client. She sues High Achievers and Kelly for the lost revenue. High Achiever’s policy would not respond even if Kelly had been hired based on the school’s recommendation.

Some programs allow for Included Entities or Other Covered Insureds which list each of the entities owned and controlled by the named insured to be covered by the contract.

Policies usually state, for emphasis, that entities that may be partners, affiliates, joint ventures or have some other operational relationship (including individuals) qualify as named insureds ONLY if they are specifically listed as such. Otherwise, NO coverage exists. Therefore, it is critically important to list ALL entities that need to be covered.

LIMITS OF INSURANCE

The most the insurer is obligated to pay as a result of losses from wrongful acts are the Limits of Insurance shown in the Declarations. The applicable maximum is not affected by the number of insureds, the number of filed claims, suits, nor by the number of persons or organizations that have made claims.

Example: An ELL Policy is issued to Acme Acres High School and its school commission. The Acme president expels a senior two weeks before his graduation date. The expulsion was due to a butter knife being found in his lunch bag. The incident violates the school’s zero tolerance weapons policy. His parents sue both Acme High and the Commission that upholds the president's action. The parents’ suit names the high school and the commission separately. Their Educators’ Liability policy will respond, but only once for both entities since the limits do not apply separately to each named insured.

Normally, two Limits of Liability are shown in the Declarations for the coverage provided. The first is a Per Claim Limit and the second is the Aggregate Limit or Annual Aggregate. The Per Claim Limit is the maximum amount available to pay a single claim but is always subject to the Aggregate Limit or Annual Aggregate. The Per Claim Limit is always capped by the amount remaining on the Aggregate Limit. The Aggregate Limit or Annual Aggregate is the most the policy will pay for the total accumulation of all losses during the policy period.

Example: Realstrict University purchased an Educators' Legal Liability Policy with a Per Claim Limit of $1,000,000 and an Aggregate Limit of $3,000,000. Realstrict, concerned about libel, slander, student protests, and related activities, developed new policies to eliminate all student publications. The university also barred students from holding any student political rallies, civil gatherings, or civil protests on campus. As a result, claims were immediately made against the University for discrimination and violation of civil rights. Within a single policy period, 22 separate claims were filed on 22 separate alleged issues of civil rights abuse, with damages ranging from $100,000 to $2,000,000 per claim.

Regardless how all these claims are settled, Realstrict’s protection will be limited to a maximum of $1,000,000 for any single eligible claim and $3,000,000 total for ALL eligible claims.

DEFENSE

Defense is a vital part of the policy and all aspects of it must be reviewed and compared when considering coverage differences.

1. Costs

The costs of defense can be handled in one of three ways:

Method	One	Two	Three
Function	The cost of defense is totally within the limit of insurance. There is no separate defense costs/expense limit. This means that every dollar spent defending an action reduces the amount available to pay for the loss.	The cost of the defense is subject to the Defense Costs/Expenses limit on the declarations. A maximum amount available for defense costs and expense is purchased by the insured at the policy’s inception. When that limit is exhausted, policy provisions describe the process used to switch the costs of the defense to the insured. Once the switch is made, the insured becomes fully responsible for the cost of defending its own liability suit or claim. This is a significant difference in coverage than that provided by the traditional, unlimited defense costs common to other liability policies.	The cost of the defense is part of the Supplementary Payments and as such is paid outside of the limits of insurance. This is the method used on most standard liability coverage forms and some educator legal liability policies. The advantage to the named insured is that defense is provided without charge to the named insured. In addition, the limits of insurance available to pay for loss are not depleted by the cost of defending the claim.
Result	Provides the insured with the least amount of protection.	Provides more coverage than method one and there is an option to increase the defense limit.	Preserves the liability limit and provides the highest level of defense coverage.

Example: Revisiting Realstrict University and their 22 claims, if the insured had purchased a policy with a defense limit of $500,000, this would be quickly used up in the investigation, defense, and settlement of the 22 separate claims. Once the insurer had spent $500,000 in costs and expenses during the policy period, they would no longer be responsible for any further defense of the insured. At that point, the cost of defense would be shifted to the insured.

2. Basis of Payment

A major difference between policies is whether defense payments are made on the insured’s behalf or upon an indemnification basis. The pay on behalf of basis involves the insurer handling all expenses upfront and directly paying any service provider or claimant. Under the indemnification basis, the insured must be responsible for handling all costs of defense out-of-pocket and then be reimbursed by the insurer. This may pose a significant financial hardship to the insured, so this option should be carefully examined before selecting.

3. Defense Handling Option

Another major difference among policies is who actually defends and who selects or appoints the counsel that will handle litigation. Some policies offer the insured the option to be defended by the insurer or to defend itself, with the chosen option shown in the Declarations. The rationale of an option is that it will provide better claims handling, better defense, lower claims expense, and result in improved cooperation and goodwill between insured and insurer.

Should the named insured select the option to choose their own counsel and defend themselves, the insurer retains the right to review, monitor, and approve the defense counsel and methods. The named insured’s counsel is obligated to inform the insurer regularly of the status of the defense and immediately notify the insurer of settlement demands and trial dates. The named insured’s counsel is also obligated to act in good faith and in the best interest of both the insured and insurer in defending a claim.

If more than one insured is involved in a claim and a conflict of interest develops, the insurer has the right to protect their interests by appointing different counsel.

4. Settlement Consent

In some policies, the insurer agrees not to settle a claim without the support and agreement of the insured. In cases where the insurer offers to settle a claim, and the insured prefers to continue litigation, the insurer’s liability will be limited to the amount it was willing to offer as a settlement.

Example: A student was expelled after an accident in machine shop class at Bailey’s Vocational Technical Institute. Later, the student files a lawsuit, claiming slander and wrongful removal from the class. The insurer negotiates a settlement with the student for $500,000. Bailey’s would not agree to the settlement because it believed in its new discipline procedures that called for the student’s removal. The case goes to trial, and the judge awards damages of $700,000. The insurer will pay $500,000 of this award and Bailey’s is responsible for the additional $200,000.

5. Appeals

Usually, it is the insurer who chooses to file appeals. Should the insurer do so, it must also handle the additional cost. However, should the named insured wish to file an appeal without the insurer’s consent, it is at the insured’s own expense. The maximum amount the insurer is obligated to pay for judgments or settlements is the amount the insurer would have had to pay prior to an unsuccessful appeal.

Because of the many options and variations available in the area of defense, this portion of coverage may have substantial financial impact. The utmost care must be given in discussing appropriate coverage with the client.

Related Court Case: Defense Arrangements by Insured Required Notice to Insurer. This is not an Educators’ Legal Liability case, but it offers some insight into how a policy’s Defense Provisions were applied.

SUPPLEMENTARY PAYMENTS

Under this portion of the policy, some insurers list additional payments related to handling claims that are paid under the policy such as:

Payment of all expenses the insurer incurs with respect to a claim it handles (investigates, defends, settles, etc.)
Cost of bonds to release attached assets but only the cost of bonds within the limits. If the bonds required exceed the policy limits, the insured must pay the additional cost. The carriers will not actually provide the bonds.
Loss of earnings (with daily and aggregate limits specified) for the insured while attending hearings or trials but only if requested to attend the hearings.
Relevant court costs to the insured related to incidents covered by the policy. An important item to consider is whether the plaintiff attorney’s fees would be covered if taxed against the insured.

These payments can be paid within the limits of insurance or outside the limits of insurance. A statement should be provided within this section. This small one-line sentence could be worth millions!

SELF-INSURED RETENTION

A Self-insured Retention is the initial portion of each claim that is to be handled by the insured. It acts much the same as a deductible but may be fairly sizable. Another way of looking at the Self-Insured Retention is to consider it as the uninsured amount of each claim that must be paid by the insured before the insurer responds.

Although virtually all Educators’ Legal Liability Insurance Policies use Self-Insured Retentions, the amount of retention required by different carriers may vary substantially. This is an important point of evaluation between programs, and again, will have significant financial impact on the insured.

Example: Let’s use the preceding example of Realstrict University with its 22 civil rights violation claims and assume that the policy has a self-insured retention of $25,000 per claim. The insured would retain, or be responsible for, the first $25,000 of each of the 22 claims, which could cost as much as $550,000. Should a final judgment in any of the 22 claims result in damage awards of less than $25,000, Realstrict would be liable for the entire amount, and the insurer would not be obligated to respond to those claims.

When a self-insured retention is part of the policy, the questions of who is responsible for defense and when the insurance company must be notified must addressed. Another item is whether the defense costs can satisfy the self-insured retention. Most carriers prefer to receive immediate notification of any potential claim so that they can monitor the situation from the start and many prefer to have some input on the defense.

WRONGFUL ACT

Educators’ legal liability coverage pays damages that result from wrongful acts. Therefore, when comparing insurance policies, one of the most important considerations must be the definition of wrongful acts. Generally, the broader the definition, the better the coverage.

Example: No Schoolin’ Casualty insures the Providia School District, including its school board.
Broad Wrongful Act Definition - Any act, error, or omission of an insured.	Narrow Wrongful Act Definition - Any act, error or omission of an insured that is related specifically to academic and disciplinary issues.
Providia School District did not receive the referendum funding needed so it was forced to make cutbacks. The school board voted 4-3 to eliminate bus transportation for any sports and extracurricular events. Forty parents of football players and band members sued the school board. Under the broad definition, the policy would respond. Under the narrow definition, it would not respond.

However, it is very important to evaluate any wrongful act definition along with any applicable exclusions. A broad definition of wrongful acts combined with many exclusions may provide less coverage than a policy having a narrower definition and fewer exclusions.

The types of claims submitted to insurers cross the entire range of functions performed by an educational facility. Wrongful acts may include instances involving any or all of the following:

· Improper or negligent student counseling, including academic counseling and career counseling

· Physical, mental, emotional, or sexual abuse

· Failure to provide a safe and secure learning facility for students and employees

· Issues regarding the legality or morality of curriculums, texts, testing methods, and program formats

· Failure to educate

· Issues regarding the assessment of a student’s ability to participate in various educational or athletic activities, or to failure to admit a student to a particular program or activity

· All areas of discrimination from religious, to racial, to gender, to sexual orientation, to ethnic, to economic status

· Personal injury claims, such as invasion of privacy due to search of a student’s locker, or releasing student information to others

· Civil rights issues ranging from manner of dress, freedom of religious practice, to freedom of First Amendment Rights like free speech and free press

· Issues of desegregation

· Busing practices

· Employment-related claims involving failure to hire, wrongful termination, improper demotion, failure to promote, denial of tenure (these are often excluded in this form but then provided by an employment-related practices)

· Labor disputes over topics such as working conditions, salary, and contracts

· Budget, financing, renovation, building, and bonding issues

Note: The above list is not all-inclusive – there are other instances that are eligible as covered, wrongful acts.

EXCLUSIONS

Exclusions must be very carefully examined to determine what types of actions are covered by the insurance program under review. Here are some typical exclusions to be aware of and to compare between programs:

· Claims for actions that occurred prior to the Retroactive Date or the Date of First Coverage

· Claims presented after the policy expiration date

· Claims for actions that occur outside of the policy territory

Note: Some insurers allow the option to purchase an endorsement extending coverage worldwide

· Claims for bodily injury, property damage, personal or advertising injury or for employee benefits injury

Note: These should be covered on the insured’s CGL policy

· Claims arising out of any intentional, dishonest, malicious, fraudulent, or criminal act, error, or omission

Example: Incidents involving assault, battery, homicide, theft, and rape are acts that are excluded from coverage.

Example: Parodime Academy is sued by a half-dozen families. All have alleged that Parodime’s Geometry teacher, who also coaches the school’s JV Lacrosse team, molested students. Parodime’s ELL insurer, after filing a Reservation of Rights to investigate the allegations, denies the claim.

· Allegations of negligent employment, investigation, supervision, reporting to proper authorities, or retention of a person for whom the insured is or ever was legally responsible whose conduct was otherwise excluded from the policy

Note: The two preceding exclusions may be combined as a single exclusion. The objective is to remove this policy from covering any type of intentional or criminal act, no matter which insured commits it. Consider carefully how the negligent employment type exclusion is worded. It might exclude only acts of insureds or as stated above, might apply to anyone over whom it has responsibility. The first could provide coverage for the board for actions of a student while the second would not.

· Lack of compliance with the Americans with Disabilities Act (ADA) or Individuals with Disabilities Education Act (IDEA)

Example: William, whose disability limits him to walking only with assistance of canes, is seriously injured while attempting to use one of his school’s restrooms. His parents sue the school because no stalls were equipped with handrails that are legally mandated by the ADA. The school’s insurer advises that the lawsuit is ineligible for coverage.

· Any wrongful act with respect to the administration of an employee benefit plan

Note: Some insurers provide an option to purchase an endorsement providing this coverage.

· Professional liability for any professional service other than education, teaching and the counseling needed for and related to these services

Note: Some insurers provide an option to purchase several different types of malpractice or professional liability options, such as for a school nurse.

· Contractual liability

· Those coverages required by Workers Compensation and similar laws

· Disputes between insureds, entities, or any covered individuals

· Collective bargaining processes, issues, or strikes

· Pollution of any type and in any form

· Incidents involving allegations of errors or omissions involving any insured while acting in a fiduciary capacity

· Civil or criminal fines or penalties levied by any federal, state, or local governmental regulatory agency or court

· Suits involving wrongful acts related to the responsibility of securing proper insurance, bonds, and similar activities

· Insolvency or bankruptcy of a covered insured or covered entity

· Any type of nuclear exposure

· Wrongful acts involving EEOC or similar proceedings by any state governmental unit

· Any broadcasting or publishing exposure, such as libel or slander

Note: Insurers that exclude these items normally provide an option to purchase coverage via endorsements.

· Wrongful acts, injury, or damage resulting from or arising from campus police or security

· Note: Insurers that exclude these items normally provide an option to purchase coverage via endorsements.

· Issues related to eminent domain and similar actions that allow a governmental entity to take property of another entity or restrict in some way how that property may be used

CONDITIONS

The Conditions specifically relating to Defense have been covered previously in this analysis. While conditions vary from form to form, the following describes the most common ones contained in most Educators’ Legal Liability Policies:

Bankruptcy

The insurer’s obligation to provide coverage and to legally defend the insured is not affected by an insured’s declaration of bankruptcy or by its insolvency.

Legal Action Against Us

An insured may not pursue a lawsuit against the insurer until exhausting all remedies and requirements of the policy. The lawsuit may not be brought unless the insured has complied with the conditions in the policy. The lawsuit may also not be brought against the insurer in order to evaluate if an insured is liable.

Some companies may only permit lawsuits after a settlement offer or final judgment for the particular action being contended has been reached.

Representation or Warranty

This condition clearly explains that the insurer has relied upon complete, accurate representations, statements, information, and other material provided by the named insured in the insurance application. This is considered so important that some companies make the application and related material a part of the policy. This means that if the named insured has misrepresented itself, the policy can be considered void.

Duties in the Event of a Claim or Suit

This Condition explains the process the insured must follow during the notification, investigation, and settlement of a claim. It also clarifies specifically when the insured should notify the insurer and under what circumstances the insured should notify the insurer of potential claims.

It is very important to determine if the insured is required to notify the insurer regarding wrongful acts as well as claims. If wrongful acts are to be reported this means ALL potential claims must be reported, even those that are likely to fall under the policy’s self-insured retention.

Wrongful acts must be reported as soon as practicable, which is measured from the time that certain persons or positions are aware of the act. An important difference in coverage forms is those parties who are designated as authorized to report acts or claims. It may be only the named insured. This is the best situation for the named insured because it allows for maximum control. However, it often includes others such as the legal department of the named insured, superintendents, officers, or any employee who is permitted to provide such notice.

The rules of this condition must be clearly established and an appropriate notification chain established.

Cancellation and Nonrenewal

This condition explains the mutual obligations of the named insured and the insurer regarding cancellation or non-renewal procedures and notices. Many of the carriers providing this coverage are using nonadmitted paper. Because of this, the cancellation and nonrenewal condition may vary greatly from the applicable, state-mandated cancellation and nonrenewal notice requirements.

Other Insurance

If other insurance applies to a claim, this condition explains how the policy applies. The coverage can apply on either a primary or excess basis. Because this is normally on nonadmitted paper, it applies on an excess basis. It therefore does not apply until any other source of primary insurance is exhausted.

It is very important to determine who must conduct the defense. This coverage may state that it will not pay for any defense as long as another carrier has the duty to defend.

When the policy is excess it is important to determine when the policy will start responding to a loss. It may only respond after the sum of the deductible, self-insured retention, and the available other has been exceeded. The exact wording is very important.

Related Court Case: No Contribution Needed By Excess Insurer

In some situations, both policies may state they are excess and then the policies could be required to share the loss. The loss may then be handled on either an equal share basis (all parties contribute the same amount toward the loss) or on a pro rata (based on the ratio of the specific policy limit to the total limits available). Most companies prefer an equal share basis so the wording must be carefully reviewed.

Example: Woeful Military Academy is covered by Primary Policy A with limits of $500,000 and supplemental Policy B with limits of $1,000,000. A bystander who was hurt during a parade sues Woeful and wins a judgment of $750,000.

· If Policy B applies on an excess basis, then Policy A will pay $500,000 and Policy B will pay $250,000.

· If Policy B applies on a pro-rata equal shares basis, Policy A will pay $375,000 (1/2 of the loss) and Policy B will pay $375,000 (1/2 of the loss).

· If Policy B applies on a pro-rata ratio method a ratio based on limits must be determined, Policy A’s ratio is 1/3 (500/1,500) while Policy B’s ratio is 2/3 (1,000/1,500). The payment is therefore $250,000 (1/3 X 750,000) and Policy B will pay $500,000 (2/3 X 750,000).

Transfer of Rights of Recovery Against Others to Us

When the insurance carrier pays a loss, the insured must agree to transfer any rights it has to pursue other parties who may be deemed responsible for the covered action. The insured must not only transfer those rights, but it must help bring suit and in other ways assist the insurer carrier in enforcing them.

A very important part of this condition is that the insured is forbidden from impairing the insurance company’s recovery rights.

Example: Though their buildings were attached, the Overly Eager Christian School was a separate entity from the Overly Eager Christian Church. Both entities had their own boards, but some individuals were members on both boards. The school’s insurance carrier, Schools R Us, settled an action brought by a former student. In this particular suit, Schools R Us determined that an elder at the church was partially responsible and decided to bring suit. The board at the school refused to cooperate and effectively ruined the chance of Schools R Us from recovering any part of the damages. Schools R Us then filed suit against the school to recover the settlement amount because Overly Eager Christian School had not fulfilled its obligation to assist in asserting its rights of recovery.

Arbitration and Alternative Dispute Methods

This condition explains the circumstances under which a dispute about a claim will be handled by arbitration or other alternative dispute methods, and the procedures that will be followed by both the insured and the insurer. An important one is that the insured is not permitted to agree to any arbitration without the written consent of the insurance company.

Premium Audit

If the policy has been rated on an auditable basis, the procedures for computing the final premium are explained.

DEFINITIONS

The Definitions section of any policy must be carefully reviewed. A word or phrase is defined when the insurance carrier wants to control how the term is defined. This can clarify coverage, expand coverage, and restrict coverage. When comparing various policies, this a very important section to consider. Here is a sampling of some of the more common definitions:

Advertising injury

Refers to an insured’s use of another party’s advertising and/or idea in its own advertising. Infringing on another party’s copyright or similar right within a notice or broadcast to the general public or a specific targeted group.

Example: Pickle University is sued for its use of a new advertising slogan “Get In A Pickle!” The suit is filed by Pickle State University which has, for longer than a decade, used “You In A Pickle?”

Bodily injury

Bodily injury, sickness, or disease. Death that results from any of these is also considered bodily injury no matter when the death occurs.

Damages

The amount an insured is legally obligated to pay as a result of a wrongful act or a covered claim. The damage can be awarded as judgments or settlements. Some carriers may specifically exclude punitive or exemplary damages (unless required by state law) sanctions, fines, penalties; or payment for professional services.

Defense costs/expenses

Legal fees and expenses incurred in the investigation, defense, arbitration, mediation, alternative dispute process, or appeal of a claim.

Note: Remuneration, salary, wages, fees, overhead, or benefit expenses of an insured are not included in this expense category.

Employee Benefits Injury

Injury that arises out of any act, error, or omission in the administration of the insured’s employee benefits programs. Group life insurance, group accident or health insurance, pension plans, employee stock purchase plans, and disability benefits are some items that could be a part of an employee benefit program but the definition is not limited to those.

Employment-related Practices

This is a wide-ranging area. Wrongful dismissal, discharge or termination of employment, breach of any oral or written employment contract, employment-related misrepresentation, violation of employment discrimination laws, wrongful failure to employ or promote, wrongful discipline, wrongful deprivation of a career opportunity, failure to grant tenure, negligent evaluation, or employment-related wrongful infliction of emotional distress are all considered employment-related practices. Many carriers explain that these practices may be inflicted upon current, former, or prospective employees.

Insured

This term is usually defined in this area or shown as a separate section of the policy. The broader the definition, the more exposure the insurance company takes on. A close comparison is very important.

Named insured

The educational institution named in the Declarations.

Property damage

Physical injury to, loss of, or disappearance of tangible property. Loss of use of tangible property is also property damage even if there is no physical injury to that property.

Suit

A civil proceeding alleging damages for injury or offenses covered by the insurance contract. The term is sometimes broadly applied to arbitration or other alternative dispute resolution proceedings but only if those proceeding are pursued with the insurer’s consent.

Wrongful act

It is an alleged or actual act, error, or omission by an insured. All acts, errors or omissions committed by one or more insureds that are substantially the same or are in any way related to each other are considered to be one wrongful act, regardless of the number of claims or claimants or the length of time between claims.

This term can be defined in this section or be addressed in a separate section of the policy.

EXTENDED REPORTING PERIODS

All claims-made policies contain an extended reporting period section. It applies only if the policy is cancelled or non-renewed or if the insurance carrier moves the retroactive date forward. It can also apply if the policy is renewed on an occurrence basis rather than claims-made.

Example: Sugar Plum Academy’s ELL policy was effective 4/1/23-4/1/24 with a retroactive date of 4/1/17. Its insurance carrier offered renewal on 4/1/24 but only if the retroactive date was moved to 4/1/24. If Sugar Plum Academy agrees to the retroactive date change, they will receive the extended reporting period.

This section does not extend the policy period. It only provides an extended time in which to report a claim for a wrongful act that occurred after the retroactive date and prior to the policy expiration date. There may be both a basic extended reporting period and a supplemental reporting period.

The basic applies automatically and typically has the following features:

· Once it takes effect, an extended reporting period cannot be cancelled

· The scope of policy coverage is NOT affected by the extended period

· It is automatic

· The time period is typically 60 days following the expiration date

· The policy’s limits are not affected by the extended period

The supplemental extended reporting period tends to have the following features:

· The reporting period does not take effect unless and until any required additional premium is paid

· The extended reporting period must be requested within a certain time after the end of a policy period (typically within 60 days)

· The length of the extended reporting period is usually limited to between two and five years depending on the carrier and the type of entity covered.

· A new set of limits apply to all of the claims first reported during the supplemental reporting period.

· Pricing for the supplemental extended reporting is capped at no more than a certain percentage of the expiring policy’s annual premium. A typical percentage is 200% but it can vary by carrier.

Example: Sugar Plum Academy decides to purchase the supplemental extended reporting period. The insurance carrier provides an extension for two years subject to Sugar Plum paying 200% of the expiring annual premium. The extended reporting period will apply to any wrongful acts that occurred between 4/1/20 and 4/1/24 for which claims were first reported between 4/1/24 and 4/1/25. Sugar Plum’s limits of insurance in the 4/1/20-4/1/21 year were $1,000,000 per wrongful act and $3,000,000 aggregate. The following claims are presented:
Wrongful Act	Initial Claim Made	Additional Claims Made	Responding Policy
10/1/18	5/1/22	7/6/23	4/1/22-4/1/23
3/4/21	8/12/24	10/15/24	4/1/24-4/1/25 – Supplemental reporting period
5/12/23	3/15/24	None	4/1/23-4/1/24
8/12/19	4/2/24	None	4/1/24-4/1/25 – Supplemental reporting period
9/14/16	5/1/24	None	None

Active Shooter Liability Concerns

Active Shooter incidents are, sadly, becoming an exposure that is happening with enough frequency that educational facilities must take these into consideration in their insurance and risk management programs. With respect to coverage under an ELL, it may depend on policy wording and how a claim is presented. Liability for active shooting may fall within the definition of a wrongful act related to an educational facility. A claimant would likely allege that a given facility was negligent for failing to provide an adequately safe premises or grounds and injury or damage arose from that failure.

It may be that coverage could fall under a base ELL policy or a coverage option may be available via an endorsement.

Besides coverage for BI or PD created by a shooter, insurers are using a wider approach that puts a greater emphasis on risk management and incident recovery, offering elements involving pre- and post-incident preparation. Preventive measures include training staff on how to respond to an active shooter. Post-incident measures include providing payments for counseling, rehabilitation, and even public relations.