Even if it were to come out of the endowment, it's what, 2-3% total? I don't know how much universities typically pull out of an endowment each year but a 3% total drop can't impact yearly budgets in any meaningful way.
So my guess is insurance may have paid the bill, but Oberlin will pay over time in the form of high premiums or something else. The biggest punishment to Oberlin will be the embarrassment of the actions. Heads should have already rolled for this.
I doubt that distinction protects the funds from a judgment creditor. The endowment money belongs to the university. Even though the university can only spend it in a certain way, that is an internal matter between the university and its donors. If the university did not have other funds from which to pay the judgment, I doubt the endowment money is protected just because it wasn't earmarked for "in case you lose a lawsuit."
An earmarked donation may legally constitute a trust. If an asset forms part of a trust, the university can only spend it in accordance with the terms of the trust, unless they have permission of a court to vary them (the cy-près doctrine). Creditors generally can’t claim assets held as part of a trust, unless the debt/tort/etc has some direct connection to the trust