Missed Deadline Costs Harvard $15M in Insurance for Admissions Policy Defense

Harvard University’s failure to notify its insurer by the policy deadline has cost it up to $15 million in insurance coverage to help it defray costs related to its ongoing defense of its affirmative action admissions program.

U.S. District Judge Allison D. Burroughs in Boston yesterday dismissed Harvard’s bid to force Zurich Insurance to pay legal costs under a $15 million excess insurance policy that she said was clear in its notification deadline and must be strictly enforced.

Harvard was required to give notice, in writing, to Zurich of any claim no later than January 30, 2016. Harvard first gave notice to Zurich on May 23, 2017, well past the deadline.

“Put simply, because an unambiguous insurance policy must be applied as written; the notice provision in a claims-made policy must be strictly construed; and Harvard’s failure to satisfy a condition precedent vitiates coverage,” Judge Burroughs wrote.

Harvard had argued that Zurich had both constructive and actual knowledge of the claims against it prior to the deadline because its primary insurer — AIG subsidiary National Union Fire Insurance Co.—was covering the first $25 million of defense costs and because the issue had been widely reported in the media and even discussed at meetings where Zurich personnel were present.

But none of those excuses changed Harvard’s obligation to provide notice in full compliance with the terms of the policy, the judge ruled.

The university has been defending its admissions policy against a lawsuit brought by Students for Fair Admissions filed in 2014 and a Department of Justice investigation launched in 2017. Both the primary and excess policies covered claims made during the year ended November 2015 provided Harvard notified the insurers by January 2016.

While $25 million of costs to date have been covered under the National Union Fire Insurance Co. primary liability policy, the university wanted its $15 million excess insurance policy issued to pick up costs above that amount. But Zurich denied coverage because Harvard missed the deadline for notifying it of its claim. Zurich said notice to the primary insurer did not satisfy its notice requirement.

Harvard said its defense costs consist of legal fees and expenses, costs associated with electronic discovery vendors, expert witness fees and court costs. The school said it has incurred and will continue to accrue defense costs.

The SFFA has contended that Harvard College’s student admissions program uses race in a way that violates the federal Title VI civil rights act and unfairly discriminates against Asian American applicants. Harvard succeeded in winning judgment on all counts after a three-week trial. SFFA appealed to the U.S. Court of Appeals for the First Circuit, which in November 2020 ruled in favor of Harvard and upheld the district court’s decision. The SFFA appeal was heard by the U.S. Supreme Court just last week and the DOJ Investigation is still pending.