Private School Insurance

The Ultimate Guide to Private School Insurance

(Educating kids: It's one of the most rewarding jobs in the world, but it's also full of hidden risks. Here's how to protect your private school from catastrophe.)

Private school insurance

Over 11 million K-12 students were enrolled in private schools in the US in 2018, and that number is only expected to grow. Private and charter schools allow students to experience elite academics, arts and technical training and religious education that public schools can’t provide, which might be why 59% of Americans agree that private and charter schools usually provide a better education than public schools.

There’s never been a better time to start a private school. If you or your organization are thinking about taking the plunge, or if you're looking to upgrade your coverage, we’ve got the private school insurance guide you need. You don’t even need to do the hard parts yourself. Our independent insurance agents can shop for you to find the right coverage at a great price.

What is private school insurance?

Even for nonprofit schools, private school insurance is almost identical to business insurance. It’s usually a blend of these five parts:

  • Liability insurance: Covers the school’s legal fees and any settlement money in case of a lawsuit.
  • Commercial property insurance: Covers the school’s buildings, equipment, and other physical items in case of damage from fire, natural disaster, vandals and more. If you’re an online private school, this could include your computers and servers.
  • Commercial auto insurance: Covers school vehicles, including school buses.
  • Workers' compensation: Covers school employees if they get hurt on the job.
  • Umbrella insurance: Supplements the coverage types above in case a disaster or lawsuit costs more to make right than those policies will cover.

There are a few other important types of insurance to consider. One is directors and officers insurance, which will pay legal costs for your board of directors and leadership in case of a serious gaffe that leads to a lawsuit. Cyber liability insurance protects your organization’s digital data. Finally, employment practices insurance covers you if you’re accused of unfair or discriminatory hiring practices.

The difference between private school insurance and vanilla business insurance is scale. When kids’ lives are at stake, the cost of a tragedy is going to be way higher than it might be at your typical restaurant or retail store. That means you’ll need to pay for more coverage. Think millions of dollars instead of hundreds of thousands. (Your coverage amount is the maximum amount of money your insurance company will pay out if you file a claim.)

This is why umbrella insurance is a must-have for private schools. The commercial auto insurance that covers your school buses may only offer a few million dollars in coverage, but if a tragic accident leaves your school facing a big lawsuit, the settlement reached could cost many times more than that. Umbrella insurance covers this gap, paying the difference so you don’t have to. It’s a cost-effective way to manage risk, since buying an umbrella policy is cheaper than buying a bunch of extra coverage on your policies individually.

Private school insurance works pretty much the same way for all types of private schools, whether they’re religious, secular or chartered. Let’s break down a few key differences:

Secular (non-religious) private school insurance

Insurance for secular private schools is usually the most basic type of private school insurance, depending on the school’s size and what types of programs it offers. (The more students and staff, the more complex the insurance.) Arts schools and technical schools may have special insurance needs if they expose students and staff to flammable or dangerous equipment and materials, such as paint or saws.

Religious school insurance and Catholic school insurance

Over 4 million students attended religious private schools in 2010, with over half of those students attending Catholic schools. Religious affiliation provides plenty of benefits to private schools, namely a built-in student base and extra space for classrooms and special events. If your religious school will share a campus with your church or other place of worship, you may be able to combine commercial property insurance and save money. Just be sure that each entity’s financial responsibilities are clearly spelled out to avoid conflict. Extra liability insurance may also buy a religious private school some peace of mind, given the extra media attention and polarizing legal situations that can develop during scandals at this type of school.

Charter school insurance

Charter schools work a little differently from other private schools, since they usually receive public funds and may function as part of the public school system. They may face additional regulations, depending on your state. Because charter schools are held to an extremely public standard of leadership—outlined in their charter—directors and officers insurance is especially important. For online charter schools, cyber liability insurance is a must, since you’re responsible for extra student data that’s vulnerable to hackers. Similar to secular private schools that offer special technical programs for students, arts- or technical-focused charter schools may have additional property and liability insurance needs.

Why do you need private school insurance?

In short, because kids are risky! Parents are trusting you to not only keep their children safe, but also to adequately prepare them for adult life. That’s a big responsibility, and there are lots of legal risks that result from that. A teacher harming a student, an inadequate curriculum, or faulty safety equipment could all lead to massively expensive lawsuits—so expensive you probably wouldn’t be able to keep your doors open if you didn’t have insurance.

There’s also the sticky matter of statutes of limitations. For adults, these statutes start ticking as soon as something bad happens. In Alabama, an adult has two years to file a personal injury lawsuit from the date of the injury. If you don’t file within that time, you don’t get to sue at all.

For kids, however, these statutes often don’t take effect until their 18th birthday. That means if a child gets injured at school while they’re in kindergarten, they (and their parents) have an extra 13 years to sue! That’s a massive risk for schools, and one that private school insurance is designed to cover.

Moving on to the adults, hiring teachers and other staff makes you financially responsible for their retirement plans and benefits, as well as any injuries that happen on the job. If you mismanage a 401(k) fund, directors and officers insurance can kick in and help you make your employees whole. If your gym teacher throws out their back, workers' compensation shields you from paying expensive medical bills.

Then there’s your school’s stuff. If your building burns down or gets damaged in a natural disaster, commercial property insurance helps pay for repairs. If equipment gets stolen, insurance pays for that, too. Private school insurance will also usually have special provisions for the lost income that might result if your building gets damaged in the middle of the school year and students go elsewhere for the remainder of the semester.

Commercial auto insurance is especially critical for private schools that own vehicles. Think of everything that could go wrong on a school bus, or what could happen if a maintenance vehicle collided with a student. 

Commercial auto insurance covers every vehicle owned by your organization. 

An accident involving these vehicles is way, way more expensive than your average car crash, and this type of auto insurance protects you from that cost.

Plus, if you’re planning to apply for loans in order to fund the school, your lender will almost certainly require you to buy insurance. They’ll want to make sure you’ll be able to keep up your payments, even in the middle of a crisis.

How much does private school insurance cost?

On the low end, you should expect private school insurance to cost thousands of dollars per month in premiums. Large private schools will pay much more.

Factors that affect cost include the size of your school (both your campus and the number of students), the number and training of your teachers, the age of your students (younger students often cost more to insure), whether you operate buses, and whether your school offers athletics and special programs.

How to save money on private school insurance

The best way to save money on private school insurance is to follow the law—and common-sense safety procedures—as closely as possible. Insurance discounts don’t usually work like 10% off coupons. They’re all about lowering risk, since the lower the risk of you filing a claim, the lower the risk of the insurance company needing to pay out. They’ll pass those savings on to you, and you may not even realize you’re getting them.

Let’s talk examples of private school insurance discounts:

  • Small school: The smaller your school, the lower its risks, so you’ll pay less in insurance.
  • No school buses—parents drive kids to school: If you don’t have buses, there’s no risk of a school bus accident on your watch, which means no risk of your insurance company needing to pay out lots of money.
  • Sprinklers: Sprinklers and other safety equipment like security cameras may be required by government regulations. As a bonus, they also often lower your insurance costs, since they help prevent fire damage and theft.
  •  No athletics or low-risk athletics: School athletic facilities are a nightmare to insure, since they’re an easy place for kids (and teachers) to get hurt. Choosing not to offer sports, especially risky ones like football or rugby, can save you money.
  •  Good leadership and policies: If you clearly spell out your school’s rules and stick to them—and make sure that those rules are fully legal and non-discriminatory—it lowers your legal liability, and maybe your premiums.

There are literally hundreds more ways to save money on private school insurance, since private schools juggle hundreds and hundreds of risks. Your independent insurance agent can help you find more.

How to get private school insurance

Private school insurance is tricky, and only a few insurance companies offer it. Luckily, that’s not your problem! You can reach out to an independent insurance agent instead, and they’ll do all the work of rounding up quotes and comparing coverage types for you. An independent insurance agent is your advocate. They’re not bound to any one insurance company, so they can help you choose the true right coverage for you—not just the quote one company is offering.

You should ideally look for an agent who has experience insuring private schools. At a minimum, they should have an established relationship with an insurance company that offers a private school insurance program. Don’t be afraid to ask your agent about their experience. If you’re not convinced that they’ve got the know-how you need, you can ask them to refer you to a colleague who does.

It’s worth noting that if you hire teachers who belong to a state or regional teachers’ association, you might already have some liability coverage. Many associations and unions buy bulk liability policies for their members as part of their dues, meaning if a teacher gets named in a lawsuit, they’ll already have help with their legal costs. Your school needs to have its own liability insurance, too, but if you’re strapped for cash, this helps lower the amount of liability coverage you’ll need to buy.

Here are a few questions to ask yourself before talking to an independent insurance agent about private school insurance:

  • What size is your school?
  • How old are your students? (K-5? 9-12?)
  • Who are your teachers? What’s their experience?
  • Who are your leaders? Board? Principal? What’s their experience?
  • What property does your school own or rent? Buildings? Equipment? Vehicles? Online cloud space and servers?

Even if you don’t have all the answers right now, your agent can help you get the ball rolling. They’ll start putting together quotes that you can compare together to find the right types of coverage, amount of coverage and price.

We’re rooting for you! Go help the next generation be the bold and brilliant leaders of tomorrow. And leave the insurance part to us.

TrustedChoice.com Article | Reviewed by Paul Martin

Now, who's ready to get their insurance problems solved?