Free Schools – a Risk and Insurance GuideFrom the out-set you will need to consider insurance implications. As soon as you begin on your Free School journey, there will be legal issues and risks which you will need to protect yourself from. We have highlighted some areas which you will need to consider carefully:

June 2013

Insurance & Risk Solutions for Schools

Oval Education

Stage Consideration

Promotion of your project at local events such as fetes and community associations

Public Liability required by organisers

Formation of your Trust Governors & Trustees Liability insurance

Leasing or purchasing of propertyProperty Damage / Business Interruption insurance

Entering into formal contracts including Funding Agreements

Legal Expenses insurance / Governors & Trustees Liability (if not already in place)

Construction of property Contract Works insurance

Employment of future staff Employers Liability insurance

Insurance Programme Checklist

Below are the principal areas we would expect to see within a standard insurance programme for a Free School. It is not an exhaustive list and will vary dependent upon your own circumstances.

Property Damage including Theft �Covering�damage�to�buildings,�contents,�fixtures�and�fittings�and�the�like,�which�will�be�the�school’s�responsibility.�

Business Interruption �Insuring�any�non-grant�income.�This�is�supported�by�a�limit�of�Additional�Increased�Cost�of�Working�allowing�the�school�to�access�funds�to�recover�and�continue�to�make�repairs�and�operate�educational�services.��

Terrorism �Cover�for�acts�of�terrorism�including�buildings,�contents,�income�and�the�additional�costs�incurred.

Money �Money�held�by�the�school�which�is�stolen.

Contract Works �Cover�in�respect�of�works�being�undertaken�on�the�school�site.

Computer �Damage�to�the�school’s�computer�equipment�including�portable�equipment�and�specific�covers�relating�to�recovery�from�loss��of�data.

Employers’ Liability Statutory�cover�insuring�your�legal�liability�following�injury�to��members�of�staff.

Public / Products Liability �Legal�liability�following�injury�to�third�party�persons�or�damage�to�property.�This�includes�Failure�to�Educate�type�claims�which�are�occurring�more�frequently�and�the�costs�in�defending�allegations��of�abuse.

Governors & Trustees Indemnity / Meeting�the�Trust’s�legal�costs�in�defending�actions�againstLibel & Slander individual�governors�for�alleged�wrongful�acts.�

Employment Practices Liability Provides�protection�in�respect�of�legal�costs�and�expenses,�as�well�as�court�awards�for�a�wide�range�of�employment��practice�violations.�

Fidelity Guarantee Theft�of�money�or�property�by�members�of�staff.�

School Journey & Trips Covering�injury,�medical�expenses�and�property�whilst�on�school�trips�and�journeys.

Personal Accident Death�or�permanent�injury�to�staff,�governors,�pupils�and�volunteers.

Legal Expenses Legal�costs�arising�from�a�variety�of�legal�action�taken�against�the�school�including�admission�appeals.�

Motor / Occasional Business Use �Cover�for�any�motor�vehicles�currently�owned�or�on�lease�to�the�school�and�cover�for�staff�who�on�occasion�use�their�vehicle�on�school�business.

Engineering Inspection Statutory�inspection�of�items�of�plant�and�equipment.�

As soon as your Trust is formed you will take on more formal responsibilities and the risk increases of legal action against either the Trust as a whole, or individuals within it. These increases in legal action can come from any source – local groups opposed to your project, local government bodies and those with which you enter into formal contracts amongst others.

We have provided a FAQ for Governors’ & Trustees Liability insurance cover below:

Q. What can be insured and against what risks?

A. Whereas Public Liability insurance is intended to cover accidents that cause injury to people, damage to their property and much more rarely financial loss, losses that are caused by the failure of school staff or governors to carry out their duties properly, are often insured separately under Governors’ & Trustees Liability insurance. In contrast to Public Liability insurance claims, Governors’ & Trustees Liability insurance claims are usually for financial loss rather than for bodily injury or property damage.

Q. How does the cover operate?

A. Claims are negotiated and settled in the same way as other Liability claims. The insurers pay the amount of any compensation that is awarded or agreed, plus associated legal costs. The insurance also covers the cost of defending governors who are prosecuted for specified criminal wrongs committed in the course of their duties, but not where there is a successful prosecution for fraud or dishonesty.

Q. What are typical exclusions and restrictions?

A. Although the insurance covers breaches of duty by staff and wrongful acts by governors, cover only applies to individuals who have acted in good faith, not when fraud, dishonesty or criminality is involved. However, the actions of a particular governor or member of staff do not invalidate the insurance cover for other governors or staff members, if the latter are also held responsible, providing they themselves have acted in good faith.

Q. How important is the cover?

A. Cover should be regarded as essential. Although legal action against teachers and schools for breaches of ‘professional’ duty is still quite rare, claims for ‘failure to educate’, are becoming more frequent. Personal claims against school governors and trustees are less frequent. However, it may be very difficult to persuade good people to serve in these capacities unless they are made completely secure against personal liability.

Q. Have there been any developments in policy wordings?

A. Historic policies limit the insured to ‘trustees, governors or senior officials’. This may cause an issue if an action is directed against a valued member of staff who doesn’t fall into one of these categories. Wider policy wordings are available to indemnify ‘All employees, including volunteers’, in addition to those normally included.

Q. What limit of cover is required?

A. In the last major guidance on Insurance for Schools, published in 2003 a minimum limit of £1 million was recommended. In light of increasing litigation and higher costs it is recommended for quotations for £2 million and £5 million are sourced. The majority of insurers provide limits on an aggregated basis, meaning that this is the total amount available in the policy period as opposed to each and every claim, thereby making the selection of higher limits of indemnity more relevant.

The importance of Governors’ & Trustees Liability insurance

www.theovalgroup.com

Insurance Procurement

Good procurement is essential for Free Schools because:

I. You are custodians of public money. II. You will be subject to EU & UK Procurement /

Contract regulations.III. You will be subject to financial penalties and

reputational risk.

A good broker will help you through the procurement stages by:

• Structuring the correct procurement procedure for you, which takes into account contract thresholds, government regulations and requirements.

• Helping you gather the necessary financial and technical information required by insurers.

• Undertaking their own surveys for inclusion in your market presentations.

• Advising on appropriate cover and indemnity limits.

• Preparing a range of insurance options for you to consider and select from.

• Accessing a wide range of insurers including broker only insurers.

Good practice on your insurance programme procurement includes:

• Starting the process early. The more time insurers have to consider your risk and ask relevant questions, the better the overall result.

• Agreeing the correct procurement structure. A two stage process is recommended whereby a broker is first selected, then a market exercise is conducted to determine the most appropriate insurer or range of insurers.

• Interviewing a range of potential brokers, assessing their experience, knowledge, added value services and proposed fees.

Would you like to talk?If you have any questions or would like to explore how you can make your insurance and risk management work harder for your Free School, we’re here to help.

Call Philip Webster on 01924 234028, Mobile 07717 802518

Or drop him an email at: philip.webster@theovalgroup.com

Oval Insurance Broking Limited. Registered Office: 9 South Parade, Wakefield, WF1 1LR. Registered in England No: 01195184. Authorised and regulated by the Financial Conduct Authority.