Rogers School District, insurers at impasse over $6 million gap in tornado claim

Representatives for the district's insurance adjuster told the Rogers School District Board of Education on Aug. 1 that a roughly $6 million difference remains unresolved in the district's tornado claim, tied to upgrades and code requirements that insurers say may not be covered.

Brian Bearden, identified as the designated adjuster with Sedgwick, said the district's total claim submitted to the participating Arkansas school entities and the insurer market is $25,000,000. "The total claim now submitted is 25,000,000," Bearden said. "We have paid out around $16,000,000, in total payments across the whole loss. I currently have in the works another 3,000,000 trying to be, get approved." He added that information and invoices are still being submitted and measured.

Bearden told the board the principal dispute—what he described as the "delta" of roughly $6,000,000—relates to differences between restoring damaged components "like for like" and later design or code-driven changes the district and its architect included in repair plans. He said some city and state reviews treated the required work as Level 2 repairs and triggered additional code-related upgrades, and insurers are reviewing whether Department of Education rules and other code triggers are an "ordinance of law" that the policy covers.

District officials described the financial strain of advancing repairs while claims are pending. A district representative said the district spent about $22,000,000 on repairs last year and received roughly $10,000,000 of that as insurance payments; staff later reported the district received an additional $4,400,000 in the 45 days before the meeting. District staff said the remaining disputed amount is approximately $6,000,000 and that having to advance funds has reduced investment income and affected operating decisions.

Board members repeatedly pressed for a clearer, expedited position from insurers. One board member said the board had advanced operating funds to reopen schools and was concerned about lost interest and the impact on staffing and services. Bearden said he will present insurers' written positions and that a negotiated settlement is an option if both sides agree; he cautioned insurers may be reluctant to pay amounts they say fall outside measured loss. Bearden added that, if the district accepted a negotiated settlement, the district would sign a policyholder release concluding further claims on the loss.

District staff and Sedgwick also discussed technical examples, including replacement of rooftop RTU units with split units and the role of roof drains or insulation upgrades; Bearden said Sedgwick tried to include many repair items it could justify and that measuring the full loss will continue until all final invoices are received. Board members asked whether arbitration or litigation were on the table; Bearden replied that legal counsel and insurers would need to advise and that outcomes could vary if taken to court.

The board did not take formal action on the claim at the meeting. District staff said they will seek a written position from the insurers and continue submitting invoices and documentation to close the active claim.

Authorities cited at the meeting included the Department of Education rules and regulations and the Arkansas participating school entities insurance program; FEMA funding for separate mitigation projects (storm shelter) was discussed as a separate process.