Red Flag: Clients who volunteer their time for community service organizations
Generosity in the service of not-for-profit organizations is a wonderful thing. But doing so can present a serious liability issue and expose your client to many unintended risks of uncovered loss.
Many standard home insurance policies provide liability defense and indemnity coverage for non-remunerative services provided to community service organizations. But beware! Many of the coverages provided by standard home insurance policies are limited only to bodily injury and property damage exposures! Some policies may provide endorsed coverage for libel and slander (personal injury), but there are still many more liability exposures that can't been defined as bodily injury, property damage, or personal injury.
Many organziations are actively involved in economic development (Chambers of Commerce, perhaps), management and employee oversight (School Boards, for example) and various other elements where allegations of negligence can lead to financial-loss claims worth millions of dollars. Most standard home and umbrella policies will not cover losses that don't involve allegations of negligence resulting in bodily injury, property damage, or personal injury.
Many organizations carry Director & Officer policies, but how many of those policies extend coverage for the defense and indemnity of individual members, what exposures are covered, and what are the limits of coverage on those policies? If you don't know who will be defending your client if they are personally sued in their service of a not-for-profit organization, then this is an immediate red flag
For any client that volunteers their time, make sure that this is known to their insurance expert and make sure that the exposure-analysis includes a review of the service organization's D&O policy. Perhaps the organization's D&O policy will cover your client's exposure. But also know that a certain high-quality personal insurance company now provides expanded "D&O" coverage as an endorsement to their personal umbrella policy! These expanded D&O options on a personal excess policy are extremely valuable for your clients who may otherwise have serious gaps in financial protection in their service with not-for-profit organizations.
Mechelsen, Inc. Darren McGraw, MBA, CIC mechelseninc.com
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