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Are You Covered If You And Your Neighbors Create a “Pandemic Pod”?

So-called “learning pods” or “pandemic pods” are popping up all over the country. They are small, in-person groups of students learning together with the help of an in-person tutor or teacher. With it come concerns about whether homeowners insurance is enough to cover all your bases.

If you are considering creating a “Pandemic Pod” with neighbors who have children the same age as yours, here are some things you may need to consider.

Here’s the scenario:

You’re reviewing school options for kindergarten and first-grade children for the fall. With so much uncertainty around public and private schooling models amid continued concerns over the corona virus pandemic, you are thinking about pooling neighbors’ kids in that age group along with yours to host a school in your home.

Let’s say you are considering hosting a total of six kids in your home three times a week, and the other days rotating through two other neighbors’ homes. You’ll be hiring a professional teacher to conduct the schooling activities, as outlined by the State Board of Education. All three families participating will be paying the teacher a salary.

So… under a homeowners coverage policy, are there specific exclusions that might apply or certain endorsements you should add?

If your homeowners policy has an exclusion for communicable diseases, there may be a problem—but the problem is only bigger because you’re dealing with a larger group.

The coverage falls apart, however, when you start charging money for this service and hiring people to perform it. Depending upon the laws of your state, there’s a potential workers compensation exposure for the employee and creating an “informal school” entails all the risks found in an ordinary school: sexual molestation, failure to educate, employee theft and more. So, unless you can find an insurer willing to provide all of those coverages, you should try to avoid this situation.

Another thing to consider is whether this might constitute a “business” since you are paying for the teacher to come into your home. Most homeowners policies have a very long definition of what constitutes a business. So check your policy or better yet, review it with your independent agent.

As always, the safest method to assure coverage is to have your independent insurance agent notify each individual carrier of what your situation is so that you can obtain either the correct endorsement or something in writing from your insurer stating their agreement that coverage is being extended to this activity.

Another thing is that in some states you might need a license to run a school in your home because this might be considered a business risk even though you, as the homeowner, are not earning revenue from it. Given the unusual times we are in it is difficult to offer a solid answer on how insurers might react to this activity. Ask your insurance agent to check with your homeowners policy underwriters.

You also may want to consider this as a non-profit business enterprise. After all, it will have all the exposures of a private school.

As over-the-top as it may sound, you and the other two sets of parents may need to consider setting up an LLC or Sub Chapter S corporation to operate the school, for liability protection, if nothing else. It would also be smart for you to run everything by a competent lawyer in the planning of this endeavor. At a minimum, you may need:

  • A commercial general liability policy
  • Including sexual molestation liability.
  • An employee benefits liability endorsement if benefits are provided
  • Professional liability for the teacher
  • Workers compensation for the teacher and any other paid individuals
  • A business auto policy including a non-owned auto liability for field trips and other activities involving autos
  • Computer coverage for the inevitable computer gear
  • Fidelity coverage to cover acts of whoever may be handling the money
  • An umbrella clause

One major advantage of this approach is that you and the other parents would avoid the inevitable mess of attempting to rely upon the diverse homeowner policies all three families have. And if a claim were to occur, there would be a single organized source of insurance coverage for all.

These recommendations may be very unattractive to you as obviously conscientious parents. However, any school has far more exposure to loss than what is envisioned by most people.

As usual, we suggest that you always check with your independent insurance agent when considering changes to your normal home routine to make sure you are properly covered should the unthinkable happen.

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