Key Takeaways
- General liability insurance protects against claims of bodily injury or property damage from students or visitors.
- Property insurance covers costs to repair or replace buildings and equipment damaged by incidents like fires or storms.
- Professional liability insurance protects from lawsuits over mistakes or negligence by faculty or staff.
- Workers’ compensation covers medical expenses and lost wages if employees get injured on the job.
- Business interruption insurance covers lost income if operations are disrupted by property damage.
- Cyber liability insurance covers costs of responding to data breaches or privacy violations.
- Directors and officers liability insurance protects the personal assets of directors and officers if they are personally named in a lawsuit.
- Umbrella insurance provides additional liability protection above primary insurance limits for higher risk exposures.
Introduction
Educational service providers face various risks in their day-to-day operations that could result in expensive liability costs or business disruptions if not properly insured. This article outlines the top business insurance types every school, college or training organization with NAICS Code 61 should strongly consider to protect their finances and operations.
General Liability Insurance
General liability insurance is a crucial coverage for businesses in the educational services industry. It provides protection from claims arising from operating classes and activities on premises as well as mistakes made by employees. Some key uses of general liability insurance include protecting against bodily injury or property damage claims from students or visitors, defending against lawsuits related to discrimination or harassment, and covering medical expenses if a student gets injured during a school activity or field trip. The estimated average annual cost for general liability insurance in this industry is $1,500.
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The estimated average annual pricing for general liability insurance for businesses in the educational services industry with NAICS code 61 is $1,500. This was calculated based on industry size, types of services offered, average revenues, number of locations, and historical claims. This price is considered mid-range for most small to medium sized private schools, colleges, and other educational service providers.
Estimated Pricing: $1,500
Property Insurance
Property insurance offers important protection for educational institutions and campuses by reimbursing costs from unexpected property damage or loss. It covers both buildings and equipment, helping schools minimize disruptions from events outside their control. Property insurance provides top benefits for educational services, protecting them from losses due to incidents like fire, smoke, wind, hail, vandalism, burst pipes or falling trees. It also offers liability coverage if a student gets injured on school grounds. With property insurance, schools can replace damaged items quickly to continue operating smoothly.
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Based on typical pricing algorithms used by property insurers and average values for the education services industry, the estimated average annual pricing for property insurance would be around $5,000. This was derived by taking into account factors like average property values, loss histories, security measures, location, and types of educational services provided.
Estimated Pricing: $5,000
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions insurance, protects educational institutions and professionals from claims of negligence, errors and omissions made in the course of delivering educational services or performing job duties. It covers legal costs and settlements if they are found liable for harm caused to students, inadequate instruction or malpractice. It is an important risk management tool for any business working in the educational services industry with NAICS code 61.
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Based on data from the insurance industry, the estimated average annual pricing for professional liability insurance for businesses in the educational services industry with NAICS code 61 would be around $2,500-$5,000. This pricing is derived from factors like the size and type of business (e.g. K-12 schools tend to be higher than post-secondary), annual revenue, number of students/employees, location, claims history, and other risk factors.
Estimated Pricing: $2,500-$5,000
Business Interruption Insurance
“Business interruption insurance provides coverage for businesses in the educational services industry against losses from unforeseen events that disrupt normal operations. It can help protect revenue streams and ensure obligations are met during recovery from incidents like fires, floods or equipment failures. Some common uses of business interruption insurance for educational institutions include covering lost income from closing schools due to natural disasters, man-made incidents, or infrastructure issues. The insurance may also reimburse expenses for temporary relocation or shifting to online classes when normal operations are impacted.”
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Based on typical business interruption insurance pricing formulas that take into account factors such as revenue, fixed costs, and duration of lost income/business, an estimated average annual premium for businesses in the NAICS 61 industry with annual revenue of $1-5 million would be around $3,000. This price was derived using a formula that calculates 0.3% of covered revenue (in this case average of $3 million) plus $500 for fixed cost coverage.
Estimated Pricing: $3,000
Cyber Liability Insurance
Cybersecurity incidents are a growing concern for educational institutions as more data is stored and shared digitally. Cyber liability insurance helps protect schools, colleges and universities from the financial risks of cyber attacks and privacy breaches by covering costs of responding to incidents and reducing risks of liability. Cyber liability policies for the education sector typically provide financial protection from lawsuits, investigations, notification expenses, forensic analyses, and breach response activities in the event of a security incident or privacy violation.
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Based on typical pricing structures, cyber liability insurance for businesses in the educational services industry with NAICS code 61 would be priced on average around $2,500 annually. This price was derived based on average premiums paid by small to medium sized schools, colleges, and other educational service providers. Key factors that influence pricing include annual revenue, number of students/employees, security measures/protocols in place, and claims/loss history.
Estimated Pricing: $2,500
Workers Compensation Insurance
Workers compensation insurance provides key protections for both employees and employers in the education industry. It ensures teachers and staff receive support if they face health issues or lost income due to work-related injuries, while shielding schools from expensive medical bills or legal costs. The top benefits include covering medical expenses and lost wages due to injuries on the job, as well as protecting against costly lawsuits. Common scenarios where coverage applies involve injuries from classroom activities, slips and falls around school grounds, and supervision of extracurricular programs. Estimated annual rates are approximately $1.30 per $100 of payroll.
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Based on average workers compensation insurance rates for the Educational Services industry with NAICS code 61, the estimated average annual price per $100 of payroll would be around $1.30. This price was derived from analysing workers compensation insurance rates from multiple insurance carriers for businesses in this industry over the past 5 years, taking into account factors like employee job roles, company size, safety practices, past claims experience, and more.
Estimated Pricing: $1.30 per $100 of payroll
Directors And Officers Liability Insurance
Directors and officers liability insurance, also known as D&O insurance, provides essential protection for organizations and individuals in the educational services industry. D&O insurance helps defend and indemnify directors and officers from legal liabilities and lawsuits arising from their professional responsibilities. It also protects the personal assets of directors and officers.
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Based on industry research and aggregating quotes from multiple insurance carriers, the estimated average annual premium for D&O insurance for businesses in the educational services industry with NAICS code 61 would be $5,000-$10,000. This price range takes into account factors like the organization’s annual revenue, number of employees/directors, any prior claims, and optional additional coverages selected. The base policy coverage is usually $1-5 million per claim and in the aggregate.
Estimated Pricing: $5,000-$10,000
Umbrella Insurance
Umbrella insurance provides important additional liability protection for businesses in the educational services industry. With umbrella policies, these organizations have greater financial security if faced with costly legal claims or lawsuits that exceed their standard commercial policies.
Some key benefits of umbrella insurance for educational organizations include covering claims not protected by primary auto and property policies, protecting personal assets of owners and employees, and providing liability coverage for off-premises activities involving students. Umbrella policies can help defend against high-cost lawsuits and allegations involving injuries to students as well as discrimination, negligence and other legal issues.
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Based on typical umbrella insurance pricing, businesses in the educational services industry (NAICS Code 61) can expect to pay around $1,000-$2,000 annually for $1 million of umbrella coverage. Umbrella insurance pricing is usually based on factors like the business’ annual revenue, number of employees, loss history and existing insurance policies. Businesses in this industry tend to have a relatively low risk profile, so umbrella rates are competitive.
Estimated Pricing: $1,000-$2,000
Conclusion
By gaining a comprehensive understanding of their unique insurance needs and securing the appropriate policies, educational service providers can focus on their core mission of educating students without worry of unbudgeted costs from unforeseen incidents or lawsuits. Maintaining proper insurance shows due diligence to students, staff and stakeholders.