Colleges and Universities Battle Insurance Companies Over COVID-19 Losses

Higher-ed campuses are seeking recovery with little success from an estimated $120 billion impact due to the pandemic.

Colleges and Universities Battle Insurance Companies Over COVID-19 Losses

The longer the COVID-19 pandemic lingered, the more money colleges and universities lost, as students left their dorm rooms for home and school events were cancelled indefinitely. The hit was enormous to campus’ financial health. And, unfortunately, even those universities that purchased insurance to cover losses due to “communicable diseases,” are struggling to be compensated.

The estimated $120 billion financial impact on educational institutions across the country from COVID-19 has incited a wave of lawsuits against insurance firms.

In a class action suit between Rockhurst University in Kansas City and insurance company FM Global, for example, the university contends in a complaint provided to ABC News, that the losses suffered fell within the policy’s coverage of “physical loss or damage to covered property and resulting business interruption.” These damages, per the policy, include losses due to “communicable disease.”

FM Global says the losses claimed are not “physical losses,” “damage to property,” or “business interruption” and therefore do not qualify for reimbursement.

According to a University of Pennsylvania law professor who has been tracking COVID-19-related litigation, this is just the start. His database currently indicates 1,600 active cases.

“If you think about it, that number is actually small,” he reported to ABC News. “I think that for every lawsuit there is, there are more businesses and people who are sitting and waiting to see the outcome of other cases.”

So far, insurance companies have won in these kinds of cases, according to Michael Levine, a Washington D.C attorney who represents businesses suing their insurance companies.

Such is the case for Kenyon College, Denison University, Ohio Wesleyan University and College of Wooster. The Ohio schools banded together to sue their insurance company, Lloyd’s of London, and were denied compensation.

Facing 23 lawsuits, according to recent tally by the University of Pennsylvania’s COVID-19 litigation tracker, is Hartford Financial Services Group.

“Unfortunately, viruses are generally outside the scope of business interruption coverage,” says Hartford Financial Services spokesperson Matthew Sturdevant.

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