Teachers targeted in insurance scheme

By Emily Richmond

Thursday, Aug. 8, 2002 | 11:09 a.m.

Nevada teachers, beware -- a company promising cheap liability insurance to educators may be a fraud, and investigators with the state Department of Business and Industry are treating the case as a potential scam.

Late last month teachers in school districts around the Silver State began receiving bright yellow fliers from the Association of Educators of America Inc., promising $1 million in liability insurance in exchange for $185. Liability insurance isn't required to teach in Nevada, but most educators opt for it.

Investigators with the Department of Business and Industry's Division of Insurance say they have no record of the Association of Educators of America being licensed in this state. The matter has been turned over to the state's enforcement office for investigation, officials said.

According to a letter from the state department, the company "does not appear to hold a certificate, registration or license to transact insurance in this state."

The website listed on the flier, www.teacherassoc.com, is no longer active. The domain name was registered to "Justin Johnson" of 631 N. Stephanie St. in Henderson, the address of a Mailboxes Etc. store. The telephone number listed for the organization was 555-1212 --- otherwise known as directory assistance.

Teacher union officials say they have seen people drop their union memberships, which as part of the package offers liability insurance, to opt instead for cheaper premiums. Officials said the total of teachers who did so could "number in the hundreds."

The Clark County Education Association, which represents the majority of the school district's 14,000 teachers, offers liability coverage as part of the annual dues of $607, said Mary Ella Holloway, the union's president.

While some other organizations may offer cheaper rates, the coverage only kicks in when a teacher is actually sued, Holloway said.

"Most of these situations are handled in the schools, not the courts," Holloway said. "We make sure a teacher's rights are protected when they're in the classroom, and if they're called to the principal's office they'll have representation."

Debbie Cahill, Nevada State Education Association director of governmental affairs, said she was concerned some teachers had already been duped.

"We have no idea of knowing how many teachers actually dropped their membership with us because they thought they were getting a good deal," Cahill said. "We need to get the word out that this isn't a valid offer."

The name of the company on the fliers, which were mailed to teachers and taken into schools, is similar to that of a legitimate teachers group, the Association of American Educators, based in Laguna Hills, Calif.

The AAE, an 8-year-old organization, offers its members $2 million in liability insurance in exchange for annual dues of $125. The group currently has about 300 members in Nevada, with the majority coming from Clark County, said Gary Beckner, executive director for the association.

The association launched its own investigation after getting dozens of phone calls from its own members who wanted to know why the annual dues had been raised while the liability coverage was reduced.

"It seems like a deliberate attempt to mislead people, which is very hurtful and upsetting because we're honest people," said Kelley Autry, who edits the association's newsletter.