Board members, administrators, trustees, teachers and other employees of educational institutions can be subject to claims and lawsuits requiring them to defend everything from their student admission policies to their employment practices. Some examples of actual or alleged incidents that can result in claims or lawsuits against educators are as follows:

·injuries to students under the supervision of the insured persons

·violations of students' civil rights

·hiring of unqualified persons

·errors and omissions related to performance of professional duties as an administrator, teacher, or educator

·civil liability arising out of corporal punishment

·deprivation of rights of parents on behalf of minor children

These claims and suits are often highly publicized and can result in sizeable monetary awards, requiring institutions to spend millions of dollars just defending and settling them. Accordingly, specialty D&O policy forms, usually in a claims-made format that often include both professional liability and employment practices liability coverage, have been developed to protect educators from lawsuits filed by students, their parents, the government, research rivals, and even fellow staff members.

While coverage varies by insurer, educator's liability policies cover actual or alleged wrongful acts that include, but may not be limited to, any act, error, or omission by any person the policy identifies as being covered for acts of discrimination, failure to educate, libel, slander, wrongful termination, denial of tenure, and breach of contract. Some of the features that may be incorporated into educator's liability policy forms are the following:

·coverage for prior acts

·defense of claims, even if they are groundless, false, or fraudulent

·a broad definition of “employment practices” that includes violation of federal, state, local, or foreign laws and deprivation of tenure

·personal injury included within the definition of a “wrongful act”

·severability of coverage for individuals

·inclusion of coverage for spousal liability

·bail bond premium

Typically excluded from coverage are losses involving deliberate acts, acts that are fraudulent, crimes, violations of federal acts, or the provision or failure to provide noneducational-related professional services, such as accounting, legal, or medical services.

Educator's liability coverage extends to a wide range of individuals associated with the institution, including (1) directors and officers; (2) members of boards, commissions, councils, and committees; (3) elected or appointed officials, trustees, directors, or superintendents; (4) employees, including student teachers, teaching assistants, and substitute teachers; and (5) authorized volunteers, including students, and (6) student interns.

Because educators may find themselves personally and financially liable for their actions or inactions, many seek the protections of educator's liability insurance coverage in the same manner as directors of both for-profit and nonprofit organizations have been doing for years. Depending on the insurer, educational liability policies can be written for a particular class of institution or profession—including colleges, universities, and trade schools—whether such schools are public or private. Premiums are typically based on number of full and part-time students and faculty members.

Public Officials Liability Insurance

Public official liability insurance (POL) is similar in concept to directors and officers liability (D&O) insurance purchased by both public and private corporations. Such coverage provides protection for “wrongful acts” as defined in a particular insurance policy but generally is designed to cover a variety of claims for errors and omissions, which can include neglect or breach of duty, violation of civil rights, wrongful termination or sexual harassment, and a whole host of claims brought against a public entity, municipality, or other governmental body including its employees.

Although such policies are similar to D&O insurance policies, a primary distinction is that that employees and the public entity itself are usually included as insureds under the policy. The following discussion describes some of the unique features of POL insurance and desirable features to look for when considering coverage.

Exposure to loss

Elected and appointed public officials at every level of government face a growing number of lawsuits relating to countless activities such as zoning, budgets, administration, distribution of permits, and more. Public official liability claims alleging failure to promote employees, discrimination, and sexual harassment also continue to skyrocket.

The exposure of cities to lawsuits has evolved over the years from almost complete protection under the doctrine of sovereign immunity to the current system where with specific immunities, exceptions, and limits public entities are generally subject to liability for their wrongful acts and omissions (torts) in the same way that private individuals and corporations are liable. Public entities are also generally responsible for the torts of their agents when those people are acting within the scope of their authority. It makes no difference whether the tort happened while the public entity was performing a governmental function (like providing police or fire services) or performing a proprietary function (like providing utility services).

Public officials and employees can be sued personally for their activities on behalf of the public entity. Absent fairly egregious conduct, however, there is often no ultimate personal financial exposure to officers or employees. This is because many public entities are required to defend and indemnify officers and employees for damages levied or claimed against them. An exception however to this general rule is that there is usually no duty to defend and indemnify where the acts of the officer or employee are found to be outside the scope of his duties or where the activities constitute malfeasance, willful neglect of duty, or bad faith.

A leading causes for litigation today arises from employee dismissal, discrimination, land use, and contract disputes and actions or decisions alleging financial loss or the violation of civil rights.

Basic Coverage

Both the POL and D&O policies insure against wrongful conduct that arises out of the insureds' administration of duties on behalf of the entity they serve. Such coverage may also be available by way of endorsement of a municipal package policy and may sometimes be referred to as errors and omissions coverage. With the formation of municipal pools more than forty years ago, such package policies became common and are still a popular vehicle today for providing POL coverage.

In addition to the public entity and its employees, related boards, commissions, or agencies may also be insured. Often, however, such entities must be within the operating budget of a public entity to automatically be considered an insured.

Most, but not all, POL policies are written on a claims-made basis and include the usual features and provisions of a claims-made policy.

Employees are generally included as insureds. Persons who perform services as volunteers, however, may require the issuance of an endorsement unless they are listed as insureds.

When arranging POL coverages, be aware that there are significant differences in available policy forms. Desirable provisions and extensions include but may not be limited to the following:

·Defense outside the limits of protection: Look for policies that provide defense expenses that are paid outside/in addition to the limits of coverage.

·Duty to defend: Look for policies that provide an affirmative duty to defend..

·Defense for criminal acts: Look for policies that pay defense for claims or suits alleging criminal, malicious, dishonest, or fraudulent conduct until determinations or admission of such conduct in a legal proceeding.

·Prior acts coverage: Always attempt to negotiate full prior acts coverage.

·Separate coverage parts for management liability, professional liability, and employment practices liability: Consider policies that provide specific and separate coverage for public officials' management liability exposures including first dollar protection for nonindemnifiable claims and professional liability protection to employed architects, engineers, accountants, and lawyers.

·Expanded definition of “insured person.“ “Who Is Insured“ should include public officials and employees serving with an outside tax exempt entity. Persons providing services under a mutual aid agreement and public officials and employees acting as directors or officers of 501c (3) nonprofit organizations should be covered.

·Expanded definition of “damages.” Look for or ask for coverage for punitive and exemplary damages (where allowed), front and back pay (EPL coverage), and liquidated damages awarded pursuant to the Age Discrimination in Employment Act and the Equal Pay Act (EPL coverage).

·Expanded EPL coverage including coverage for third-party EPL claims. Look for coverage for mental distress, injury, anguish, tension, pain and suffering, shock, and humiliation arising out of a wrongful employment practice as well as employment-related libel, slander, or defamation. Attempt to cover third-party liability arising out of discrimination or harassment of nonemployees by employees.

Always keep in mind that the laws governing liability and protections from liability of public entities can vary from state to state, and certain governmental authorities may be granted unique or special immunities. Know the laws that apply to your circumstance and discuss with your insurance agent, broker, or insurer to ensure you are receiving appropriate coverage.

Fiduciary Liability and Insurance

Similar to directors and officers liability insurance where coverage is provided to protect the individual liability of covered persons in the event the corporation or entity is unable or unwilling to provide indemnification, so too does fiduciary liability insurance act to protect employee benefit plan fiduciaries from personal liability imposed under provisions of the Employee Retirement Income Security Act of 1974 (ERISA). However, since under most D&O policies personal fiduciary liability imposed by ERISA is specifically excluded, affirmative protection for ERISA exposures usually requires issuance of either a special endorsement to the D&O policy or (preferably) purchase of a separate specialized fiduciary liability insurance policy written in conjunction with a fidelity bond and employee benefit liability coverage (such as can be included in a general liability policy).

ERISA

ERISA grew from a pension reform movement that gained significant momentum when the Studebaker Corporation, an automobile manufacturer, experienced severe financial dislocations and began closing production plants in 1963. Because the Studebaker benefit plans were so poorly funded, when Studebaker eventually ceased operations, thousands of workers were left with only a fraction of their promised pension benefits.

After years of planning and design, President Gerald Ford signed ERISA into law on September 2, 1974, and it has been amended numerous times since then. Although ERISA embodies a sweeping body of regulations, some of the most important to business executives are those setting minimum fiduciary standards for pension and employee benefit plan trustees and fiduciaries. These standards relate to the basic fiduciary duties owed to the plan which include the duties of

·Loyalty and exclusive benefit

·Prudence

·Diversity of investment

·Adherence to plan documents

Under ERISA, the corporation, or other plan sponsor, and any individual that exercises discretionary authority or control over the management of any employee benefit plan, such as but not limited to persons responsible for investment, control, or disposition of assets of an “employee benefit plan,” can be considered a fiduciary and subject to the personal liability provisions of the Act.

Under ERISA, fiduciaries may be held personally liable for breach of their responsibilities in the administration or handling of employee benefit plans. Under the act, liability of plan fiduciaries is stated to be “personal,” and corporate bylaws and indemnification provisions are generally not applicable. This leaves such individuals without insurance protection unless the D&O policy is specifically endorsed to cover such exposures, or other separate fiduciary liability insurance is purchased.

Also under ERISA, the term “employee benefit plan” includes any plan, fund, or program established or maintained for the purpose of providing to its participants or beneficiaries employee benefits. Plans can be sponsored by public or private corporations or by governmental bodies such as those covering city, county, and other governmental entity employees.

Employee benefit plan fiduciaries can also be held liable for the acts, errors, and omissions of outside entities that provide administrative and related services. This can include organizations that service pension and benefit plans such as actuarial, law, accounting, professional administration firms, investment advisers, and management companies.

Insurance Protection

Adequate protection from ERISA imposed liability is generally addressed by the following forms of commercial insurance/bond:

·Fiduciary Liability Insurance: Not required by ERISA but strongly recommended to provide protection against personal liability. Covers breach of individual fiduciary liability and other errors and omissions. According to Section 410(b) of ERISA, any plan fiduciary is permitted to purchase fiduciary liability insurance for this exposure.

·ERISA Bond: Required by ERISA. Provides first-party coverage for employee dishonesty of plan assets.

·Employee Benefits Liability: Not required by ERISA. Covers errors in administration of employee benefit plans. Widely available under general liability and umbrella/excess liability insurance policies

From an insurance perspective the only insurance coverage mandated by ERISA is employee dishonesty insurance, which is generally referred to as ERISA insurance or an ERISA bond covering individual employee benefit plan assets. The required coverage is 10 percent of the plan assets of each plan, subject to a minimum amount per plan of $1,000 and a maximum amount per plan of $500,000.

It is important to keep in mind that fiduciary liability insurance is not required by ERISA; however, it is highly recommended because personal assets of any plan fiduciary are at risk. Based on recent studies, average settlement and/or awards in ERISA liability suits average nearly $1 million with defense costs approaching an average of nearly $400,000. Many fiduciaries wrongly believe that their ERISA exposure to personal liability is covered by the ERISA required fidelity bond, which is incorrect.