If you serve on the board of a local youth athletic association, you need to educate yourself regarding nonprofit liability insurance. Nowadays, angry or upset parents are suing the daylights out of athletic associations, creating an urgent need for nonprofit liability insurance policies.
Standard Liability Insurance Will Not Protect The Board
Most athletic associations carry general liability insurance, which will cover if a child is injured during a sporting event and the athletic association was negligent. But many board members of athletic associations are unaware that general liability coverage does not cover them if they are accused of mismanaging the organization.
If, for example, a child is injured during a game, the parents may accuse the ruling association of not enforcing stringent safety standards. The parents can sue the board of the association for failing to properly manage the association, negligence, or even gross misconduct.
General liability insurance will not cover the costs of defending the board from a lawsuit claiming mismanagement. Only good nonprofit D&O insurance indemnifies the board members from having to pay exorbitant legal fees.
The case of Brentwood Academy vs. The Tennessee Secondary School Athletic Association went all the way to the Supreme Court! In this lawsuit, Brentwood was challenging the jurisdictional authority of the Athletic Association. The athletic association most likely purchased nonprofit liability insurance, because they wouldn’t have the funds to take this case to the Supreme Court.
All Nonprofits Need Protection
Many other types of nonprofits can benefit from nonprofit D&O insurance. The Nonprofits Insurance Alliance of California is a special organization that pools together liability insurance for a variety of different nonprofits. Medical nonprofits, NGOs, missionaries, homeowners associations, and many other nonprofits are included in this alliance.
Nonprofits need to engage in risk management just as much as for-profit companies. Disgruntled employees sue nonprofits just as much as they’ll sue for-profit companies. For example, Chubb Insurance reported that 78% of nonprofit liability claims came from allegations of employment discrimination or wrongful termination. Employment Practices Liability can be packaged together with your D&O policy to provide coverage for these claims.
Include EPLI and E&O in your Nonprofit Insurance Policy
All nonprofit organizations should also consider purchasing EPLI insurance and E&O insurance. EPLI stands for Employment Practices Liability Insurance. This will protect you and your company from claims made by employees alleging discrimination or wrongful firing. E&O, or errors and omissions insurance, protect companies from inadvertent errors made by the company that causes a monetary loss to a third party.
With sexual harassment claims skyrocketing, it’s obvious that all organizations, including nonprofits, need to implement EPLI into their insurance policies. Employers can be held liable for the actions of their employees. In fact, in the last decade, the number of employment discrimination claims has nearly tripled.
EPLI can cover a variety of claims, including discrimination, wrongful infliction of emotional distress, sexual harassment, wrongful termination, deprivation of career opportunity, wrongful discipline, and much more.
All nonprofits need to equip themselves with good nonprofit liability insurance. In today’s litigious society, a good insurance policy is the only defense against vicious lawsuits. It’s always smart to anticipate the worst and plan in case anything should happen. Insurance for non-profits does not have to break the bank, but is vital part of the long-term financial planning of the organization.
In this case, consult with an insurance professional who can consult with you and tailor a nonprofit insurance policy that will protect your nonprofit organization. You will be glad you did.
Read more about nonprofit liability insurance and the best plans for your company.
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Source by Russ Birch
