Does Our School Really Need a $15 Million Liability Limit?

SORSA Board Decides on Higher Limit for All Members

For the SORSA renewal effective July 1, 2014, all SORSA members will have a “per occurrence” liability coverage limit of $15 million. More than half of the SORSA membership had already elected this higher limit, so the change affects those members who had previously chosen a lower limit.

Why the change? An upward trend in multi-million dollar judgments and settlements

We recently conducted a study of recent judgments and out-of-court settlements involving K-12 schools, and the result is disturbing. Sometimes you hear about huge jury awards. Often, however, the out-of-court settlements slip under the public radar. Needless to say, whether a judgement and settlements, a multi-million dollar payment hurts a school district pocketbook the same.

These examples of recent large awards and settlements are from 2015 and do not involve SORSA Members.

The increased liability associated with school buses

In our view, the liability associated with transporting students is risk #1. A school bus accident involving serious injury or death, with an at-fault bus driver, can get a school to high liability limit in an instant. This is especially true when you consider that the statutory immunities that apply to Ohio public schools make an exception for operation of a motor vehicle. There is no special immunity for driving a school bus.

Will buying higher liability limits increase our chances of getting sued for more money?

A common myth, but not true. Regrettably, some school districts have learned just the opposite lesson the hard way. There have been instances where schools have had to pass a special levy to pay for a judgment that exceeded their insurance limits.

SORSA reinsurance restructured for this change

In order to increase the SORSA liability coverage limit for the entire group of members, we made some changes to our liability reinsurance structure. Our primary liability reinsurer, United Educators, increased their layer of coverage for a lower premium than we were paying before. The reinsurer above that, Scottsdale Insurance Company replaced the previous reinsurer Everest Reinsurance Company. The net result of this restructuring of reinsurance allowed us to increase the limit while also decreasing our cost of reinsurance.