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Liability
and Insurance
 Under Minnesota law, a charter school must assume legal
liability for events arising out of its activities. It is the charter
school board that is the legally responsible entity. Neither the Commissioner,
nor the school's sponsor may be held liable for events arising out of
the activities of charter schools.
Minnesota law specifically states that a "charter school
is a district for the purposes of tort liability under [MN Statutes]
chapter 466," (Minn. Stats 124D.10, subd. 8j) and requires the school's
contract with its sponsor to contain "assumption of liability by the
charter school." (Minn. Stats 124D.10, subd. 6(7)) The law also provides
that the school's board of directors may sue and be sued. In addition,
the law provides that "the Commissioner, a sponsor, members of the board
of a sponsor in their official capacity, and employees of a sponsor
are immune from civil or criminal liability with respect to all activities
related to a charter school they approve or sponsor." (Minn. Stats 124D.10,
subd. 25)
It is imperative a school obtains appropriate and adequate
insurance to protect the assets of the school, its staff and board of
directors. In fact, the law requires that the school's contract with
its sponsor identify the types and amounts of insurance to be obtained
by the school.
What types of insurance will a charter school need?
At a minimum, the school will need the following:
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General Liability Insurance-to protect the school's assets
in the event it is sued or found liable from some debt or wrong
;
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Staff and Directors Errors and Omissions Insurance-to cover
the staff and directors from personal liability during their work
at the school;
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Property Insurance-to cover losses sustained by any real
or personal property of the school from theft, fire, earthquake,
vandalism, etc.; and
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Workers Compensation and Unemployment Insurance-payroll-related
insurance as required by any applicable state and federal laws.
(NWREL, Workbook 4, Governance and Management, pp 102-103)
When do you need to obtain insurance? A school is strongly advised
to obtain General Liability and Staff and Directors Errors
and Omissions insurance as soon as possible - that is, as soon as
the school begins to engage in activities from which liabilities may
arise. These activities (e.g., leasing space, contracting for services
or hiring staff) will commence almost as soon as your charter is approved,
and certainly well before your school opens. Imagine, for example, a
contract dispute between your board and the project manager hired to
develop and open the school. In the past, the Minnesota Department of
Education has required schools to obtain Directors Errors and Omissions
Insurance within 90 days of receiving approval of their charter. Property
and payroll related insurance should be in place by the time property
is acquired or staff are hired.
Insurance is not cheap, and it is important that you include this expense
in your budget projections. The cost of insurance varies greatly from
school to school, depending on the types of insurance you obtain and
such factors as number of students, number of staff, size and location
of property, etc. You are encouraged to consult with an insurance agent
to obtain a reasonable estimate for your school. While expensive, costs
can be reduced by prudent risk management practices (e.g., well-maintained
facility) and/or by joining with other schools or nonprofits to obtain
a group rate.
A good insurance resource for Minnesota charter schools is the Minnesota
School Boards Association (MSBA), which has established a nonprofit
insurance trust as a service to its members (the MSBA Insurance Trust).
Charter schools are welcome to join MSBA and participate in the trust.
Most charter schools do join MSBA, largely to participate in the insurance
trust. As of September 2003, 74 Minnesota charter schools were members
of MSBA. Membership in MSBA requires an annual fee. The fee for fiscal
year 2004 (July 1, 2003-June 30, 2004) is $470.
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