Harvard can't use $15M insurance policy in court battle

Harvard University can’t access $15 million in insurance coverage it was counting on to help pay more than $27 million in legal bills the college rang up defending the racially-conscious admissions policy known as affirmative action.

A Boston federal judge said Wednesday school administrators waited too long to notify Zurich American Insurance Co. that the college had been sued by Students for Fair Admissions in 2014. The activist group claims Harvard’s undergraduate admissions policy unlawfully considers race as a factor, which harms high-achieving Asian American students. The case was argued before the US Supreme Court on Oct. 31.

Harvard — like many institutions and companies — buys insurance to guard against incurring big legal expenses if it must defend itself in court. Harvard immediately notified its primary insurance provider of the affirmative action suit, which will let it access up to $25 million in coverage after the university covers basically a $2.5 million deductible.

Read More: College Affirmative Action in Doubt After Supreme Court Fray 

But for unknown reasons, Harvard didn’t tell Zurich about the lawsuit until May 2017, which US District Judge Allison D. Burroughs said was “well past the deadline” to access a policy that provided up to $15 million in an additional layer of excess defense coverage.

“As Zurich aptly observes, courts ‘leave no wiggle room’ to excuse an insured’s noncompliance with the notice provisions,” Burroughs said in a ruling that granted the company’s request to resolve the issue without a trial.

In earlier court filings, Harvard disclosed that its legal bills exceed $27 million in defending both the lawsuit and a 2017 Justice Department probe into university admissions policies, which remains pending.

The case is President and Fellows of Harvard College v. Zurich American Insurance Co., 21-cv-11530, US District Court, District of Massachusetts (Boston).

To contact the reporter on this story:
Laurel Brubaker Calkins in New York at lcalkins@bloomberg.net

To contact the editors responsible for this story:
Katia Porzecanski at kporzecansk1@bloomberg.net
Peter Blumberg