Schools are now buying insurance against mass shootings

Here's yet another impact of the rash of school shootings that has plagued America in recent years: Interest in insurance coverage against such incidents is on the rise from both public and private schools. That's especially so in the wake of the latest high-profile mass shootings that left more than two dozen dead at high schools in Florida and Texas, according to companies that sell this type of insurance.

Officials at McGowan Cos., which says it's the largest underwriter of "active shooter" coverage, said they're having a tough time keeping up with hundreds of inquiries from schools and other customers such as local governments, shopping mall operators, senior care facilities and hotels. Hiscox Insurance also has seen an rise of interest in shooting coverage from schools.

"We are literally overwhelmed every day," said Thomas McGowan IV, CEO of McGowan Cos., adding that his company continues to add employees to address the demand for coverage. "Traditional insurance policies aren't intended to deal with mass shooter events."

Florida's Palm Beach County School District acquired active shooter coverage from McGowan last year because it wanted the "risk assessment and training service" that came with the coverage, according to Dianne Howard, the district's director of risk and benefits management.

"Sometimes, departments tell you that they're doing everything they need to do, but when you look at other places where [attacks] have happened, you see there was actually a problem," she told Governing magazine. "So I wanted an outside perspective to see what else we could do." 

According to Reuters, premiums can vary from $1,400 for $1 million of insurance for a small private school to $50,000 to $100,000 for $5 million to $10 million in coverage for large public school districts. McGowan's firm covers $250,000 per shooting victims who are either killed or disabled. That doesn't include medical expenses, which can be substantial.

Many districts have been reluctant to buy these policies because they were costly, had strict exclusions and limited victim benefits, according to Paul Marshall, managing director of McGowan's Active Shooter/Workplace Violence Division. He added that current coverage is more affordable and flexible for schools.

Though school shootings remain rare, administrators are mindful that the financial costs for these tragedies can be considerable, particularly if they want to replace the building where the tragedy occurred, which may not be covered by traditional insurance.

The 2012 massacre at Sandy Hook Elementary School in Newtown, Connecticut, that killed 20 children and six adults is a case in point. Newtown taxpayers voted in 2013 to demolish Sandy Hook and build a new school on the  same site at a cost to taxpayers of about $50 million. Coincidentally, that was the same price tag for the 1999 Columbine mass killing that left 12 students and one teacher dead.

Officials in Parkland, Florida, are planning to tear down and rebuild the parts of Marjory Stoneman Douglas High School where the Valentine's Day shooting took place that killed 17. A school safety law signed in March allocated $25.3 million to replace the building. 

Other costs from mass shootings that schools need to consider include mental health counseling, litigation, funerals and investing in new security systems.

"A number of the schools we've spoken with seem to be interested in the risk management services that are offered with the policy, including the crisis response component," wrote Jennifer Rubin, a vice president at Hiscox, in an email.

Covering mass shootings isn't easy since they vary quite a bit. Dangers also evolve. Several incidents in Europe, for instance, haven't involved guns but rather people getting behind the wheel of a motor vehicle with the intention of running people down. McGowan offers coverage for these types of incidents as well.

"It's a highly dynamic area of insurance, and not many people have the expertise to deal with these situations," McGowan said. "It's also difficult to determine what to charge and what to cover because there are so many different ways these events are taking place."

The debate over school safety, however, shows no signs of ebbing. President Donald Trump advocates arming teachers, a move that both teachers' unions and insurance companies that serve schools oppose.