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LKSD Sues Insurance Companies To Settle Claim For Kilbuck School Fire

A photo taken in 2016 of the destroyed Kilbuck school campus.
Dean Swope

In the middle of the night on Nov. 3, 2015, a fire started on the Kilbuck school campus that eventually engulfed the building in flames and destroyed it. Four years later, a replacement school is still nowhere near completion. The Lower Kuskokwim School District and its insurance companies disagree over how much money the school district should receive to build a new school, a decision that will now be up to a jury. LKSD is suing its insurance companies, with the trial scheduled for March 2021.

LKSD Superintendent Dan Walker says that he had expected to start building a replacement school much earlier.

“There’s been very little movement on the part of the insurance companies,” Walker said.

Last May, LKSD filed a lawsuit against its insurance company, Alaska Public Entity Insurance, and its excess carriers. Excess carriers are basically insurance companies for your insurance company, when the claim is too big. Walker says that the lawsuit isn’t for a set amount of money.

“It’s to get us a new school, whatever that cost,” Walker said. “We believe we bought a replacement policy, and we expect a replacement school.”

LKSD pays $520,724 in yearly premiums for its insurance policy. APEI’s Executive Director, Barbara Thurston, agrees that the policy provides for a replacement school, with overall coverage up to $200 million. However, she says that LKSD sent the insurance company a design proposal for a new school that goes beyond replacement.

Thurston says APEI’s policy only covers $5 million in something called “code upgrades.” These are improvements in the replacement school to comply with building codes that were added since the original school was built. Walker says that without all the required code upgrades, it’s not a replacement school.

“We have to have a building that we can legally occupy,” Walker said.

Thurston says that there are aspects of LKSD’s design for the new school that don’t fall into either “replacement” or “code upgrades.” She says that they are improvements, which the insurance company won’t cover.

Last April, Walker estimated that it would cost around $40 million to replace the Kilbuck school, which he says was built between 1958-1961. Thurston says that the insurance companies have already paid the district $20 million for the value of the burned down building. She says that the lower amount reflects the building’s age and condition, but she said that they could pay more once the parties agree on the replacement cost.

The jury trial to decide the settlement is scheduled for March 2021. However, the location for the trial is still up for consideration. APEI has requested the trial be moved from Bethel to Juneau. Judge Nathaniel Peters denied the initial request, but the insurance companies want that reconsidered by the court. It is also possible that the case will be resolved before it goes to trial. Thurston says that a settlement mediation is scheduled for March of this year.

Greg Kim was a news reporter for KYUK from 2019-2022.