When it comes to insurance, every industry and business has specific needs. A one-size-fits-all approach does not work. An industry-specific approach to insurance helps businesses plan their risk management programs in accordance with the threats that could derail their entire business.
In this blog, we discuss insurance for the education sector — schools, colleges and coaching classes. The safety of schools and educational institutions is a national concern. There have been numerous incidents of school buses meeting with accidents, school premises getting damaged due to natural calamities, and discrimination and assault within the school premises, among others. The most recent tragic incident — a fire at a coaching institute in Surat, Gujarat, claimed the lives of 19 students. Equally horrific was the incident at a school in Gurugram where a student was murdered.
For educational institutions, it is a must to:
- First, ensure safety measures for the students
- Second, ensure that all the possible risks are covered through insurance.
There is a lot at stake, the lives and safety of children, the reputation of the institution, and property and assets that every business works hard to build.
Why do educational institutions need to buy insurance?
A school building collapse, a fire in the building, a student falling off from the stairs, a teacher facing wrongful termination or an incident of food poisoning at the campus canteen causing sickness to students — educational institutions are vulnerable to multiple risks on a daily basis, putting the safety of thousands of children and adults are grave risk. To understand the need for insurance for educational institutions, let us first comprehend the risks that can be protected and covered.
Educational institutions risks
Liability risks: Institutions, its directors and teachers can be held legally liable from a third party in case of any negligence.
Risk of personal injury: Accidents, assault or criminal activities can cause bodily harm to students or anyone working at institutions.
Property risks: Institutions could face several unexpected financial risks such as business interruption costs, legal costs and incremental costs due to mishaps.
Other risks: Risks to students and teachers while they are travelling, working outside the school premises and others.
Insurance ensures smooth functioning of the institution
Insurance may provide financial compensation in case of uncertain expenses for a business arising from risks that have been insured. This can help the institution to run smoothly even in situations when there is a financial loss or expenses that leave a business vulnerable.
Insurance can enhance the reputation of the institution
All the stakeholders of an educational institution — parents of students, investors, teachers and staff — would be more keen to work with an organization that is professional and it shows that it cares for those who study and work there. A school that provides group health insurance to its teachers and has insurance, as part of its risk management program would be more favourable to teachers and investors, respectively.
Types of insurance for educational institutions
Property insurance is meant to compensate for losses or expenses arising out of damage to physical property. In this case, the school premises, equipment, furniture and fixtures and other valuable assets of the institution or school.
Property Insurance can be purchased as an umbrella insurance or as specific risks insurance such as fire insurance, earthquake insurance, money insurance, and vehicle insurance, among others.
Institutions may also protect the separate assets of their business with insurance such as electronic equipment insurance, vehicle insurance, money insurance, furniture and fixtures insurance and more.
Business Interruption Insurance
Business Interruption Insurance can provide financial coverage for losses and expenses that arise out of any interruption in the operation of the institution. A natural calamity, a fire or even a human error to the electrical system of the school could lead to an abrupt halt of operations. At times, the stoppage could be for weeks and months. In such situations, schools could face a massive loss of revenue, loss of credibility, and plenty of incremental expenses. Business Interruption Insurance can ensure that the activities of the school do not stop because of the immense financial stress.
It provides compensation for:
- Lost income
- Daily expenses
- Relocation and incremental expenses
Group Health Insurance
Organizations purchase Group Health Insurance for the staff to provide coverage for health-related issues. Health insurance provides financial compensation to the staff at times of hospitalization. There are multiple benefits of group health insurance:
To staff and employees
- Group health insurance policies are cheaper than individual policies.
- Employees do not have to worry about health expenses.
- Most group health policies do not require the insured to undergo medical tests or check-ups
- A number of employers provide coverage for the employees’ family members as well.
- Group health plans ensure quality health care and treatments as companies mostly tie up with prominent hospitals.
For the education institution
- Tax benefits
- Increased productivity as the staff feel cared for
- It attracts quality professional teachers to the institution
Public Liability Insurance
Public Liability Insurance provides compensation against legal claims for bodily injury or property harm to a third party. This insurance provides coverage against legal claims related to medical expenses, legal expenses, lawyers’ fees, court-related expenses, and settlement costs.
A few key points to note:
- Bodily injury to a third party could arise in the institution’s premises or away from the premises while the person is engaged in an activity that is related to the institution.
- Defects in the institution’s building, furniture, equipment, floor, staircase and the failure to provide care and supervision over students can lead to legal liabilities.
- Intentional, malicious and fraudulent actions from any of the staff of the institution can lead to legal liabilities.
- Institutions can also purchase additions or extensions, such as Food and Beverage extension. Schools that offer boarding and lodging and food to students can face legal actions due to death or bodily injury to any student due to food.
Let’s look at some possible scenarios and cases, to understand the importance of Public Liability Insurance.
- A school bus driver has an accidental fall inside the school because of a broken wooden staircase and gets injured. The driver could file a lawsuit against the school.
- The residential building adjacent to the school gets damaged due to the repair or construction work going on in the school. The owners of the residential building can file a lawsuit and legally claim compensation for the damages caused to their property.
- A teacher files a lawsuit against the dean of the school for wrongful termination. The dean of the school would be liable to compensate the teacher if the case filed is lost by the dean.
- A school bus meets with an accident when the students are on their way for a picnic. The parents of the students decide to file a lawsuit for negligence.
Directors & Officers Insurance
In many cases, not only the institution, the directors and decision-making employees of the institution can also be held legally responsible. Imagine that a student slips on a wet floor and gets injured. Or there is a fire at the school premises. The parents of the students decide to file a lawsuit against the school as well as the dean of the school for negligence.
The Directors & Owners (D&O) Insurance is designed for the protection of directors, officers, and the decision-making staff of a business in the event of a legal claim. This policy pays for legal defence costs and financial losses. In the case of educational institutions, the common reasons that the directors could be sued are:
- Negligence and default
- Discriminatory practices
- Allowing harassment to students or teachers knowingly
- A failure to comply with regulations
- Financial discrepancies
Value-added solutions from insurance broking company
Today, insurance broking companies and brokers are providing comprehensive service related to risk management. Their work does not involve only selling a general liability policy to the institute. With increasing demands, more complex risks and customer demands, insurance brokers have enhanced their services.
- Assessment of risks to the institution
- Evaluating the possible losses and expenses
- Help with ways to avoid risks through safety measures
- Finding the best solutions for specific risks
- Finding the most suitable insurance plans
- Tailoring plans to suit specific businesses
- Help during claims
- Help in managing insurance portfolios
In India, the safety of children at educational institutions is a serious issue. It is the responsibility of all stakeholders to ensure safety and risk management measures. PlanCover helps organizations, including schools, colleges and coaching classes safeguard against different kinds of risks by providing the best possible insurance solutions. PlanCover provides comprehensive insurance service — risk assessment, risk evaluation, finding the most suitable insurance, comparative quotations and policies from different insurers and management of insurance portfolio.