Bi lessons for education clients

When a school, college or university considers insurance, one of their main concerns is coverage for tuition and fees lost if they are temporarily unable to deliver educational services. But during a business interruption (BI), it’s not just tuition and top line expenses that need coverage; it’s also the operating costs and other lost income, such as event ticket sales and bookstore sales.

More than just tuition and salaries

Big events like hurricanes and other natural catastrophes are what most educational clients consider when evaluating their BI exposures. For example, in the aftermath of Hurricane Katrina, it was reported that approximately 46,000 public college students did not re-enroll and more than US$200 million in tuition was lost. And while many colleges were forced to close temporarily, they were still responsible for paying approximately US$400 million in salaries and benefits to employees.

Less complex losses, like small fires and water damage, can also put educational clients in a difficult position. For instance, a university that experienced a contained lab fire reported BI losses resulting from lost research grants, personnel overtime, and relocation, equipment rental and contractor fees.

Another example involves water damage to a library. BI losses included cost to relocate property, increased document delivery costs, and cost to shift services to e-resources.

So while many institutions assume that if they have coverage for tuition and salaries, they have their BI exposures protected, they are wrong. There’s much more to consider.

Educational clients that produce revenue or earn income through the sale of goods or services should also closely analyze their BI exposures. In the event of a loss, lost ticket sales, bookstores sales, rental income and other lost profits can add up quickly.

The FM Affiliated difference

With education being one of the largest industry sectors that FM Affiliated serves, we know its exposures and how to protect them very well. Through our broad and robust coverage, we provide numerous advantages and contract certainty.

In our core policy, the proVision 4100, we offer educational facilities Expense to Avert coverage to cover overtime, temporary labor, rental of equipment or buildings, and more. This allows flexibility to pay out under the standard BI, unlike other policies where most of these costs fall under Extra Expense, which can be tapped out quickly.

Key coverage can also be found in our Education Endorsement, which extends these coverages as a result of a covered loss:

• Emergency Evacuation Expense
• Fund Raising Expense
• Students' and Teachers' Personal Property
• Prizes and Giveaways
• Professional Employee Replacement Expense
• Research and Development Animals and Experiments
• Students' and Teachers' Relocation Expense
• Tuition and Fees

For an explanation of these and other FM Affiliated coverages that are valuable to educational institutions, view this Education Endorsement overview.

Learn more

To be certain that you are considering coverage for all education-related risks—even those that are not top of mind—talk to your account team. FM Affiliated’s Education BI worksheet can also help you evaluate your exposure. BI worksheets can be found on FM Affiliated Online, FM Affiliated’s extranet for brokers and clients, or by contacting your production underwriter.

Note: This information is provided for purposes of illustration only, and does not constitute, replace, or supplement actual policy language. Each loss must be examined with reference to its own particular facts and circumstances, in light of applicable policy language. The liability of FM Affiliated is limited to that contained in its insurance policies.