Schools in the United States are facing an increasingly volatile casualty insurance landscape. Rising litigation costs, shrinking abuse coverage and growing liability exposures are forcing schools to adapt quickly to protect students, staff, reputations and budgets. Here’s a look at the key challenges — and how schools and their insurance agents can respond.
Social inflation and runaway verdicts
One of the biggest challenges in casualty insurance is social inflation, which refers to the impact that societal trends like litigation funding, class-action expansion and shifting public sentiment have on claims, settlements and jury awards. For schools, this is a serious concern.
“With increased litigation costs and social inflation, we’re seeing bigger settlements and bigger verdicts,” says Kevin Beer, president of Wright Specialty. “It’s the snowball effect, especially in jurisdictions where the risk of a nuclear jury verdict makes everyone more inclined to settle.”
In 2024, the number of so-called “Nuclear Verdicts®” — jury awards exceeding $10 million — hit a record high of 135, according to research firm Marathon Strategies. The total sum of these verdicts was $31.3 billion, a 116% jump over the prior year. Notably, 49 of these cases resulted in verdicts exceeding $100 million, with five topping $1 billion.
These high-stakes outcomes pose serious risks for schools, where liability exposures range from facility accidents to supervision-related claims. One example occurred at Sky Valley Education Center in Washington State, where a jury awarded $275 million to students and parents alleging injuries from polychlorinated biphenyls (PCBs) in aging light fixtures.
When a single verdict reaches eight or nine figures, such as the $27 million award against a California school district after a student was fatally beaten, it can recalibrate expectations across the entire market. For schools, this means higher premiums, reduced capacity and stricter underwriting.
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Abuse coverage: A shrinking safety net
Sexual abuse and molestation (SAM) exposures are a growing liability concern for schools. Rising claim volumes and escalating jury awards, especially in historic cases, are driving demand for stand-alone SAM coverage. While not federally mandated, many states, districts and contracting partners now require it.
“Limits are hard to find, especially for K-12 schools, and when a carrier will provide coverage, it’s very expensive,” says Eric Homer, vice president, Clear Risk Solutions. “As a result, school districts are having to retain more risk locally.”
Legal changes have intensified the challenge. States like California, New York and Washington have extended or eliminated statutes of limitations for childhood-abuse claims, exposing schools to decades-old allegations.
“The backfilling of old claims has really soured the market’s appetite,” Homer notes, adding that many insurers have shifted from occurrence-based to claims-made SAM policies to limit historical exposure.
Coverage limits have dropped sharply. “Where schools once carried $25 million in SAM protection, many are now capped closer to $5 million,” Beer notes. When combined with higher retentions and reduced market capacity, schools are under pressure to manage their risk more aggressively.
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Managing risk: What can schools do?
The hardening casualty and SAM market is pushing schools to take a proactive approach. Homer explains: “It’s forcing organizations to spend more time developing clear, actionable policies that staff can understand and follow.”
Agents can guide schools to take steps to manage risk, including:
- Implement comprehensive boundary-invasion training: Teach staff to understand, establish and maintain appropriate relationships with students. This training is mandatory in many states and helps prevent inappropriate conduct.
- Strengthen hiring and screening procedures: Background checks, reference verification and careful interviewing reduce the likelihood of bad actors entering the school environment.
- Adopt clear, enforceable policies and procedures: Written guidelines for reporting, supervision and student interaction provide a consistent framework for staff and students.
- Foster a culture of safety: Encourage open communication and ongoing awareness, such as monthly or weekly reminders, so that staff and students know how to respond if concerns arise.
- Monitor evolving state laws: New statutes in states like New York, California and Washington extend claim filing windows and tighten reporting requirements, requiring schools to adjust policies and documentation accordingly.
“Unfortunately, it’s not always enough,” Beer cautions. “The bad guys are still out there. A school can do everything in its power, but these chameleons are good at what they do. Even with perfect policies and background checks, we’ve still seen big losses and big jury verdicts.”
Tips for agents: Supporting schools in a complex market
Insurance agents play a vital role in helping schools navigate these risks by focusing on risk-management engagement, underwriting transparency and continuous education.
“A big part of it is taking advantage of the resources that are out there,” Beer explains. “Our teams provide a lot of risk management advice and training. We visit the schools, give seminars and offer very specific online and in-person training. It’s all about making sure schools are aware of the exposures and how to protect themselves. But if these value-added services don’t reach the insureds, they’re not effective. Brokers and agents can help push that.”
Homer adds that ongoing education is critical. “It’s not enough to talk about this or conduct training once a year,” he says. “Encourage regular training sessions to keep risk awareness top of mind and create a culture of safety across the school environment. That applies to all exposures, not just abuse.”
In this market, the quality of the insurance submission matters more than ever, Beer adds. “If there’s been a loss, provide as much detail as possible. Explain what the school has done to prevent similar incidents. Underwriters want to know: What happened? Is it systemic? Is the insured taking it seriously? What’s the likelihood it could happen again? That detail is really important.”
In a time of rising risks and shrinking coverage, brokers and agents have a unique opportunity to guide schools toward resilience — not only through insurance, but through education, transparency and proactive risk management. Those who truly understand their clients’ risk culture will be best positioned to navigate this turbulent market and secure stronger outcomes for schools.
This material has been prepared for general informational purposes only, is intended to apply generally rather than to any specific company and presumes appropriate discretion will be exercised regarding any particular situation.
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