Can a Student Accident Insurance Program Help Reduce Rising Liability Costs? 

Public school liability verdicts and insurance premiums continue to rise. Some school districts have shown that a comprehensive student accident insurance program resulted in reduced liability claims and reduced liability premium. In addition to adding considerable value to school districts and the families they serve, a well-structured student accident insurance program can help mitigate rising liability cases and premiums.

Liability claims against school districts are undeniably on the rise, driven by a convergence of evolving legal and societal trends that have heightened exposure to such risks. Growing student enrollment and a broader range of school activities have expanded the potential for incidents, including bullying, harassment, sports injuries and accidents at events. Simultaneously, the growing integration of technology in education has introduced new vulnerabilities, such as data breaches and cyberbullying, leading to claims involving digital safety. Parents and guardians are more informed about their legal options, which has contributed to higher reporting of incidents. At the same time, schools face challenges adapting policies to address emerging risks effectively, making them more vulnerable to claims. These trends underscore the need for robust risk management practices and comprehensive insurance coverage to mitigate exposure.

If an injury should occur, an unexpected ER visit could cost a family $1,500 to $3,000 on average without insurance for non-life-threatening conditions, according to an analysis of 2.5B claims adjusted for inflation. Costs can reach $20,000+ for critical conditions requiring extensive testing or emergency surgery.

The less financially able a family is to handle an unexpected cost, the greater the likelihood they will face severe financial hardships, often requiring them to forgo crucial obligations or take on unsustainable debt.

It also increases the likelihood that families will seek someone else to cover the cost, resorting to litigation against the school district. When such litigation arises from a student accident, the district – due to its perceived “deep pockets”- becomes a frequent target for claims since the accident occurred:

• On campus
• During a school-sponsored event (athletics, field trips, etc.)
• While traveling to and from school and school-sponsored events

Regardless of fault, all parties must retain legal defense in both lengthy and costly litigation processes that can result in settlements far exceeding the medical costs associated with the incident or injury. In reviewing numerous liability loss run reports, we find the average monetary request stemming from these lawsuits is 3X the cost of the initial medical expense. In most cases, settlements land at around half of the initial request, resulting in an average settlement at 150% of the medical costs behind the initial incident or injury – after legal fees and other related expenses are accounted for.

Blanket student accident insurance is designed to avoid this scenario by indemnifying families before they are put in desperate financial circumstances. Myers-Stevens & Toohey are utilizing this strategy by corresponding directly with the district’s liability carrier to receive notification of any potential medical claims. They then contact the school immediately to initiate the student accident claim process with parents and get out in front of possible tort claims. By paying these covered injury claims through an insurance policy, regardless of fault, costs are controlled through network discounts and repricing on the front end, while reducing litigation costs on the back end.

We have seen general liability premiums stabilize in the early years of the program, with the possibility of reductions to these premiums as the student accident program matures. When the student accident insurance program is used correctly, liability claims can see a significant drop after several years, which puts us in a favorable position to renegotiate premiums by demonstrating causation behind this correlation to our liability underwriters.

This process of shifting student injury claims to a separate student accident insurance policy can alleviate pressure on retention funds and litigation reserves. Districts may be able to fund the student accident insurance program through monies initially earmarked for these funds. This, in turn, puts the district in a position to having a student accident insurance policy essentially pay for itself. Correct use can also control utilization and build claim equity that can be later used to absorb occasional shock losses that typically lead to rate hikes.

In addition, districts can consider other similar policies for risk exposures that lead to large general liability claims. These include:

• Field trips
• International travel
• Athletic clinics not sponsored by the school but still organized by their staff
• Non-school sponsored events held on campus
• Offsite student on-the-job training programs

These examples are just some exposures that can turn into significant liability claims.

Reach out to Alliant Public Entity for more information on the loss data for legal fees paid and incurred for student injuries for large public schools.