July 8, 2019
Dear Fraternity and Sorority Chapter Presidents and Alumni Corporation Leaders,
We are writing to you as the undergraduate and alumni leadership of fraternities and
sororities that occupy University-owned chapter houses on Lehigh’s campus. For the
alumni corporation leaders, this letter is accompanied by a copy of a newly revised Lease
Agreement for your chapter’s University-owned chapter house. This new Lease
Agreement is provided for your review and signature on behalf of your chapter. The
Lease Agreement must be signed and a signed electronic copy returned to
inhouse@lehigh.edu, with a signed original sent by U.S. Mail to: Housing Services,
Lehigh University, 63 University Drive, Bethlehem, PA 18015 no later than
August 7,
2019.
In addition to sending you the new Lease Agreement for your chapter house, we are
writing to alert you to important financial and liability issues impacting your chapters.
As you are no doubt aware, there have been a number of tragedies nationally associated
with fraternity activities. Here in Pennsylvania, the tragic death of Timothy Piazza at
Penn State has created heightened awareness of the potential for dangerous behavior. It
is a stark reminder that the safety of our students must be foremost in our minds, as we
are sure it is in yours, and we all need to continue our work to do all that we create a safe
environment for students.
One of the reasons we are writing is to inform you that, in light of recent events,
insurance companies have re-evaluated their assessment of the risks associated with
insuring Greek organizations. As a result, there is likely to be decreasing availability and
significantly higher costs for insurance coverages as required by your chapter house
Lease Agreements with the University.
In recent years, the University has not uniformly enforced the insurance requirements
under the chapter house Lease Agreements. Some chapters obtained full coverage while
others have not. It is now imperative that each chapter obtains the required insurance
coverages.
Background:
As you may know, throughout the history of Greek chapters occupying University-owned
chapter houses on campus, the University has required each chapter to purchase property
and liability insurance covering its occupancy of the chapter house and to provide
insurance certificates to the University documenting such coverages. These coverages
include property insurance to cover loss or damage that could occur to the property and
liability insurance to cover losses that could be incurred in the event of bodily injury or
death of any individual in or on the property premises or similar type losses caused by
acts or omissions of the chapter occupying the chapter house. For over 20 years, the
required limits of these coverages under the University Lease Agreements with each
chapter has remained the same: a minimum of $1 Million for property insurance and a
minimum of combined general liability insurance limits of $5 Million. During this
period, the Lease Agreements have also always required that such insurance be placed
with an insurance carrier rated A- or better by AM Best Rating Agency and that Lehigh
University be named as an additional insured under the liability policy. It is important to
note that these Lease Agreement provisions require that the chapter must purchase the
required insurance coverages using its own insurance professionals or agents to place
coverages and must pay all insurance premiums from its own chapter funds. The
University does not place or purchase any of these coverages as it is solely the chapter’s
legal responsibility. All of the Lease Agreements with chapters are the same with respect
to the required insurance coverages.
Current Status:
In recent years, it has been a challenge – both financially and from a practical standpoint
– for many chapters to obtain the insurance coverages required under the Lease
Agreement with the University. These challenges have increased significantly in the past
year, with the national insurance market reacting to the increased risks and liabilities
associated with Greek organizations: risks associated with alcohol, including underage
drinking and high risk drinking, and hazing. In Pennsylvania, risk assessments of Greek
organizations and Greek life by insurance underwriters have been particularly stringent
due to recent tragedies: the hazing and alcohol-related death of Timothy Piazza at Penn
State University in 2017 and the hazing death of Chun Hsien Deng, a Baruch College
student, in 2013.
In the past year, some Greek chapters occupying University-owned houses did not have
the insurance coverage amounts required under the Lease Agreement with the University
and were therefore in breach of the Lease Agreement. To date, the University has
chosen not to exercise its rights against these chapters under the Lease Agreement due to
these breaches, while encouraging such chapters to remedy this shortcoming. To protect
the rest of the University, and in fairness to those chapters that have satisfied the
insurance requirements in the Lease Agreements, the University must begin enforcing
them across all chapters. As provided in the Lease Agreements, any decision not to
immediately enforce the insurance provisions and pursue breach remedies does not in any
way waive, reduce, or modify the insurance provisions nor does it change the
University’s right and ability to enforce them strictly at any time in the future.
In view of the current realities of increased risks and liabilities associated with Greek
organizations, the University must take action.
Important Immediate Steps for Each Chapter:
1. Each chapter occupying a University-owned chapter house should immediately
begin communications between its undergraduate chapter leadership, its alumni
corporation leadership and appropriate qualified insurance professionals engaged by the
chapter to assess where the chapter stands with respect to the insurance coverages
required under its Lease Agreement with the University. The chapter and alumni
leadership should inform the chapter’s national organization of the insurance
requirements and ascertain what, if any, assistance the national organization can provide
to the chapter to understand the current insurance market for Greek organizations and
what options may be available to obtain the required insurance coverages now and in the
future.
2. Each fraternity and sorority chapter president should promptly share this letter
with their chapter members. Student undergraduate chapter members should ensure that
they are aware of how much their chapter pays for insurance and should inform their
parents of the insurance requirements applicable to their chapter under the Lease
Agreement. It is important to note that, depending upon the type of insurance coverages
a chapter purchases, and the chapter’s compliance with applicable rules or policies of the
chapter or its national organization as may be required by such insurance policies (e.g.,
policies limiting coverage for events involving alcohol or hazing), individual student
chapter leaders or members may not be personally insured, or insured only to a very
limited extent, under the chapter’s insurance policies. This is very important to know in
light of the fact that in recent hazing and high risk alcohol death and injury lawsuits,
students have been sued individually (both in Pennsylvania and in other states). As a
result, parents of student leaders and members of Greek organizations may want to assess
their own insurance coverages. The University cannot provide advice or assistance on
this issue; each family must seek and obtain any professional advice it needs as to
appropriate insurance coverage for their student.
3. The University is currently assessing the insurance challenges faced by fraternity
and sorority chapters occupying University-owned houses. The University will continue
to assess the situation and possible solutions in the coming months and will communicate
with chapters as the University evaluates the short term and long term implications of
these challenges. As a first step, the University has amended the Lease Agreement
between the University and each fraternity and sorority chapter to reduce the insurance
coverages required under the Lease Agreements to a minimum of $1 Million for property
insurance and a minimum of combined general liability insurance limits of $2 Million
(instead of the current $5 Million). As stated in the Lease Agreement that accompanies
this letter, chapters will be required to deliver to the University certificates of insurance
evidencing the required insurance coverages and limits at least ten (10) days prior to the
August 16th Lease Commencement Date, i.e.
no later than August 7, 2019 (and annually
thereafter). The Lease Agreement has been further amended to provide that if a chapter
fails, refuses, or neglects to obtain and produce certificates of insurance evidencing the
required insurance coverages and limits by that date (August 7, 2019), it will be
considered to be in breach of the Lease Agreement and the University will have the right
and the option of immediately terminating the Lease Agreement. In such a situation, the
chapter members will be permitted to continue residing in the chapter house, but there
will be ramifications that may include, but will not be not limited to, the following:
limitation or elimination of the ability to host social events, the chapter house becoming
alcohol-free including individual bedrooms regardless of age of the resident, an impact
on 2019-2020 accreditation for the chapter, and/or other measures as deemed appropriate
by the University under the circumstances to reduce risk and potential liability for the
entire University.
4. As stated in item 1. above, each chapter should immediately begin
communications and preparations between its undergraduate chapter leadership, its
alumni corporation leadership, and appropriate qualified insurance professionals to
prepare to meet the August 7th deadline for obtaining and producing to the University
certificates of insurance evidencing the insurance coverages and limits required under the
new Lease Agreement.
Further Information and Frequently Asked Questions:
• How did the University decide the amount of insurance coverages to require
under the chapter Lease Agreements? Is it necessary to have such high insurance
limit requirements?
Answer: The University determined the insurance coverage requirements after
appropriate assessments and advice from the University’s General Counsel and
Director of Risk Management, assisted by outside legal, risk management, and
insurance professionals engaged by the University. The established insurance
limit requirements have been in place for over 20 years and while the University
is reducing the required liability coverage limit, this change may be of limited
duration and in the future the required insurance coverage limits may need to be
increased in light of the current risk profile of fraternities and sororities and
increased liabilities associated with the activities of Greek organizations; i.e., the
risks associated with alcohol including underage drinking and high risk drinking,
and hazing.
• Would it be more effective and less costly for the University to obtain all
necessary insurance coverages for each fraternity and sorority chapter?
Answer: While the University continues to explore viable options to protect the
University, the fraternity and sorority chapters that occupy University-owned
chapter houses are separate legal entities with separate insurable interests; they
are not part of the University or its operations. These chapters and their alumni
corporations therefore must obtain and maintain separate insurance coverages to
protect their respective insurable assets and interests against losses or liabilities
arising from their members’ acts and omissions.
• Why isn’t it sufficient if a fraternity’s or sorority’s national organization has
insurance? Can’t the national organization’s insurance coverages protect Lehigh?
Answer: The national fraternity or sorority organizations’ respective insurance
programs will provide some liability coverage for a local chapter and/or alumni
corporation, but the level of liability insurance coverage will vary from group to
group. This coverage may also be limited to the undergraduate chapter and
individuals residing in the University-owned chapter house.
• Can the University provide advice and assistance to chapters in their obtaining
and negotiating insurance coverages and premiums?
Answer: No, since fraternity and sorority chapters are independent legal entities
that exist and are governed separately from the University, it is inappropriate from
a legal standpoint for the University to provide insurance advice and assistance to
chapters. Each chapter must obtain advice and assistance from appropriate
professionals (e.g., legal counsel, insurance brokers and agents, etc.) who have the
expertise and legal or professional relationship with the chapter to assess the
chapter’s status, liability profile, finances, governance structure, and other factors
to provide appropriate advice and assistance in procuring insurance.
In closing, we need to emphasize that the health and safety of all Lehigh students is
paramount. The University’s requirement that fraternity and sorority chapters occupying
University-owned houses purchase insurance coverages has been a requirement for
decades and constitutes the University administration’s appropriate exercise of its legal
responsibilities and fiduciary duties to ensure that there is adequate insurance for
potential losses and liabilities that could arise from activities on the University’s campus.
The current insurance market for Greek organizations reflects that such organizations
have acted, and failed to act, in ways that create significant financial liabilities for the
organizations, the University, and students personally. Insurance is a financial product
purchased to transfer risk and obtain reimbursement for losses and liabilities and the cost
and availability of insurance are indicators of the perceived magnitude of risks and
likelihood of losses and liabilities. Insurance does nothing to reimburse for, or provide
recovery for the loss of a student’s life or the impact of a life-changing injury caused by
high risk drinking or hazing or other high risk behaviors.
The University emphatically urges all fraternity and sorority chapters to assess, both
immediately and on a continuing basis, their activities, policies, and values to identify
changes that are necessary to ensure that its members are not exposed to risks to their
health, safety, and life.
Sincerely,
Dr. Ricardo Hall, Vice President for Student Affairs
Ozzie Breiner, Director, Housing Services
Frank Roth, General Counsel