By Mary E. Whisenand, AU, RPLU
A key element of enterprise risk management is identifying what financial risks can be easily transferred through implementing insurance requirements. Third parties including vendors, students, and visitors can introduce unexpected financial losses that can be mitigated by implementing insurance requirements.
Common Risk Transfer Policies.
Requiring third parties that create potential financial losses to secure insurance coverage to pay for claims or damages they cause is a practical approach used by private sector companies. While contracts can provide some institutional comfort, if the counter party is incapable of paying for the losses that they cause, then the school will likely suffer a loss.
Within higher education, the risks are often distributed across departments, and what is a normal best practice in business may not be easily implemented on campus. As a result, leaders are smart to evaluate how to implement insurance requirements by the source of risk.
Best Practice for Campus Housing
According to the multi-family housing association, 84% of property owners require residents to demonstrate proof of liability insurance so that residents can pay for damages caused by residents. StarRez, the market leader in student housing management software, announced that schools can seamlessly integrate the GradGuard’s Renters Insurance Program into their housing portal, which enables schools to disclose the limits of liability while providing affordable protection against unforeseen losses that may occur on or off campus. This valuable feature is a no-cost option for StarRez clients.
"There are approximately 1,840 fires on college campuses every year based on Clery Act Reports data since 2009."
Vendors can create multiple risks often covered under a general liability policy, but not all risks are covered. Schools are smart to also evaluate additional risks caused by vendors, including:
Cyber Risk - vendors who have access to institutional data, student and employee data, or institutional intellectual property. Cyber insurance can protect institutional data against breach, ransom, and other threats caused by vendors.
Sexual Abuse & Molestation - vendors who interact with students or minors on campus.
Students can pose risks that were uncommon just a decade ago. -
Student Housing - The combination of widespread fire suppression with the electronics that students bring to campus is a common source of losses. With nearly 2,000 fires reported in student housing annually, the losses caused by campus residents is real.
Student Health - International students are required under federal law to secure insurance to pay for health expenses they may incure on a student visa.
Refunds - Students who are forced to withdraw due to legitimate causes can leave the institutions with account s receivable that cannot be paid.
Intramurals & Campus Activities - Students waivers are useful but not always sufficient to pay for students who are injured during school sanction activities.Excess Accident medical coverage for group activities and short-term events are a best practice.
Professional Liability - Students who are working in a para-professional function or doing their clinical rotations (i.e.: nursing students) are often required to carry professional liability. Student policies could assist in mitigating the risk of a school being identified as a responsible party.
Employees Travel -
International accident and sickness insurance for a wide range of travel and study-abroad programs can help mitigate risk.
Third Parties including visitors and alumni. -
Campus Events - Third parties who seek to use campus facilities (such as for a club event or an alumni wedding), can expose the institution to claims caused by their invited guests.