Schools Find Lessons About Insurance Liability and COVID-19 Are Complicated

September 21, 2020

School officials and insurers across the country are facing questions about COVID-19-related insurance liability as classes begin, but answers remain elusive, according to A.M. Best.

“Uncertainty about the plethora of issues involved with school liability abounds,” A.M Best said in a commentary. “Whether immunities are afforded, pandemic liability suits prevail, or additional states extend presumptive clauses to teachers, there is the potential for significant expense, and possible losses, for school insurers,” the rating analyst said.

School insurers themselves are also at risk of employment practices liability as well as cyber claims as schools resort to virtual learning in an effort to reduce COVID-19 risks.

A.M. Best said that given these potential scenarios, some reinsurers have already indicated that they will be requiring COVID-19 and pandemic exclusions, as well as communicable disease exclusions, in their 2021 renewals.

It’s Complicated

The broader issue is whether a school can be held legally liable if students, staff or others succumb to the coronavirus pandemic. The answer for school boards and administrators remains a complicated one.

School districts typically have liability protection from “some form of a governmental or public entity tort immunity act” with provisions that vary by state. In theory, the ratings agency said, these acts would likely protect districts from liability if their reopening plans dovetail with local, state and federal laws, and also guidance from state board of education officials, the Centers for Disease Control or local health departments.

That is except where there might have been negligence, and what could be considered negligent remains an open question.

According to A.M. Best, there has been a push to strengthen immunity protections, although momentum has slowed. Some unions and workers’ rights advocates have resisted immunity protections, arguing that they would lead to negligent behavior from businesses and schools, and ultimately more coronavirus cases.

Workers’ compensation insurance is also an issue for schools. Teacher unions want confirmation that workers’ compensation coverage will address their medical bills and lost income if COVID-19 strikes. That remains an open question, as A.M. Best explains, because the coverage does not typically cover routine community-spread illnesses like the cold or flu (they can’t be linked to a workplace, typically).

As for other insurance coverage itself, A.M. Best notes out that insurers that cover schools range from small-cooperatives to large commercial insurers. That means coverage standards vary greatly, and thus coverage guarantees can vary widely, even outside of the pandemic.

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Insurance Journal West September 21, 2020
September 21, 2020
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