Hunton Insurance Recovery Blog

Hunton’s insurance coverage team recently secured an important appellate victory for clients St. John’s University and Hofstra University in a coverage dispute arising from United Educators Insurance Company’s (“UE”) categorical refusal to defend or indemnify the universities in student class action lawsuits filed after the universities transitioned to remote instruction during the COVID-19 pandemic.

The decision is significant both for colleges and universities facing pandemic-related tuition refund suits, and for policyholders more broadly. It reaffirms a core principle of insurance law: a liability insurer’s defense duties require a defense even where some of the claims or relief sought in the underlying lawsuit may not be covered. Rather, where the allegations create a reasonable possibility of covered loss, the insurer must defend the entire lawsuit.

Like other policyholders, hard insurance market trends, aggravated by cybersecurity risks, climate change, and COVID-19, have hit higher education policyholders, yielding reduced or limited coverages for increased premiums. These conditions – reduced coverages and higher premiums – are symptoms of a “hard” insurance market. (A hard market is caused by a mismatch between policyholders’ waxing demand for coverage and insurers’ waning risk appetite.) But higher education policyholders face unique risks that exacerbate existing market conditions, including: