Many college students returning to class this fall will encounter a changed campus culture. As schools grow more aware of the risk of sexual attacks on campus, some have implemented educational programs for students or reformed how they handle accusations of abuse. A few colleges are doing something else about the problem of campus rape: They’re buying new insurance policies designed to protect them when sexual misconduct scandals arise.
In recent years, insurance companies such as the Tuscano Agency in Pennsylvania have begun to offer sexual misconduct policies designed specifically for the tangle of costs colleges face from sexual assault accusations and their fallout. Tuscano started offering a policy with a $10,000 premium that covers as much as $1 million in 2012.
Some sexual misconduct insurance policies and other liability policies, such as United Educators policy, don’t cover expenses incurred by the alleged perpetrator of an assault, or damages schools owe for failing to report sexual misconduct to authorities in cases when they were obligated to, says Joe Carter, vice president in charge of business development and marketing at United Educators, which insures almost 700 U.S. colleges.
Most schools still don’t have standalone sexual misconduct policies, because their liability insurance covers sexual violence claims that fall under Title IX, the federal regulation that protects people against gender discrimination at schools, says Carter. Often that covers claims of abuse, sexual assault, or rape and also provides services to help victims, investigate allegations, and cover litigation expenses.
In the notorious sexual abuse case of former Penn State assistant football coach Jerry Sandusky, the school’s $59.7 million settlement was paid through its liability insurance policy, the school said. But for the 50 institutions being investigated for how they handled sexual assault cases, and other schools like them, insuring against such events may become more costly.
After the Sandusky settlement, some in the insurance industry said they expected higher liability expenses to hit colleges. “Whenever you have an event like this, it can change insurance underwriters’ view of the risk, not only at the specific institution but at institutions of higher education, more broadly,” Scott Harrington, director of the Wharton Penn Risk and Insurance Program at the University of Pennsylvania, told the Pittsburgh Tribune-Review in 2013.
When Tuscano announced its new coverage in 2012, commercial casualty manager Tim Hoelle wrote: “This isn’t intended for a small risk, but really fills some possible coverage gaps for mid- to large-size entities, public and private. And it’s important to note this isn’t an afterthought with sub limits of $50,000 or $100,000. In this day and time a $50,000 limit just isn’t sufficient.”
￼Coverage for sexual misconduct gets tricky, because it can vary considerably. Some policies cover as much as $40 million, while others limit coverage to $500,000 or less, United Educators’ Carter says. “Some education-centric policies will provide coverage for adult-on-minor sexual misconduct, where some insurers may not be comfortable with this type of exposure.”
At the same time, some insurance policies aggregate claims, meaning a person who raped five different individuals would fall under one claim. Other policies take the opposite approach (PDF); in the above example, there would be five claims instead of one.
The American Bar Association notes that “if [a] policyholder’s loss exceeds its policy’s per-occurrence limit, the policyholder may prefer that multiple occurrences be found so as to access the aggregate limit,” which is often much higher.
The inclusion of sexual misconduct in liability insurance is still quite new. It wasn’t until the 1980s, when problems of sexual abuse in the Catholic Church made headlines, that insurers started to reference such coverage (PDF) when underwriting institutions.
While litigation expenses aren’t growing, because most of them fall under liability policies, resolving the problem has become costly for universities, which dedicate more resources to investigating and resolving incidents of sexual assault, Carter says. “Students should be taught about healthy relationships and respect before they step onto a college campus.”