Volunteers-without them, most nonprofit organizations would not exist. They are the common soil in which most mainstream nonprofits are planted, providing services in countless different areas.
Yet although property/casualty coverages are fairly easy to find in today’s soft market, volunteers can provide some significant exposures from an insurance standpoint.
Once an organization goes through the proper motions to become approved as a nonprofit, there are usually no specific required coverages that the nonprofit must purchase. For that reason, and the fact that many of these organizations may simply not be aware of what their liabilities are, a large number of nonprofits remain uninsured.
“Many of them believe that certain laws protect them against loss with respect to their volunteers,” said Mike Komar, marketing director of Charity First in San Francisco. “The federal Volunteer Protection Act [signed into law by President Clinton on June 18, 1997] gives the impression that nonprofits are not liable for their volunteers for their own actions. That’s simply not true.” Komar said there are a lot of misconceptions about who is covered under what policy under what laws.
While the act does provide some immunity for volunteers serving nonprofits, Komar noted that it does not cover crimes of violence, sexual offenses, violations of federal or state civil rights laws or acts committed under the influence of alcohol or drugs. Furthermore, it does not protect the nonprofit entity itself.
To eliminate any discrepancies and make sure that all bases are covered, the organization must rely on its insurer.
Steve Moody, vice president of insurance operations for the Santa Cruz-based Nonprofits’ Insurance Alliance of California (NIAC), which insures a number of animal-related risks, agreed that one of the trickier underwriting issues surrounding animal-related nonprofits is protection for the volunteers. These groups typically include shelters and SPCAs or groups that deal with feral and stray cats and can range in size from, for example, a husband-and-wife team that founds a nonprofit to help animals, to large organizations utilizing numerous volunteers.
“We’ll have some of the smallest [groups] request coverage for the first time,” Moody said. “They’ve been in business for years, but they’ve never had coverage before. [Maybe now] they’re receiving a grant from somebody, and the grantor is requiring them to provide proof of insurance.”
Moody said that at many animal shelters, the volunteers can get scratched or bitten, requiring volunteer workers’ comp coverage or volunteer accident coverage. While some programs do have volunteer endorsements which can be put on workers’ comp policies, most workers’ comp carriers, because of control and monitoring difficulties, are usually not willing to add such endorsements.
“Our particular program does not provide volunteer coverage under the workers’ comp policy, but we can offer an accident insurance policy which could pick up certain types of claims,” Komar said. “If we’re handling a large volunteer base, we sometimes like to see that the claims are handled directly through their own health insurance. But as a goodwill effort, a nonprofit can offer accident policies.”
If the insured does not choose to buy the volunteer accident coverage, steps should be taken to make sure the nonprofit informs its volunteers that hazards are involved and make sure they understand they could be held personally liable for their own actions. Also, a “hold harmless” agreement can deter volunteers from making claims.
Komar underlined the importance of working with the nonprofit organization to set up a risk management program to avoid claims-such as dog bites to both volunteers and the general public who come to view animals for adoption-and to reduce the chances of them occurring.
In addition, Komar indicated other policies where volunteers should be added on as insureds. “We make sure that on our general liability policy, the volunteers are covered (which is the standard additional insured endorsement),” he said. “We also offer professional coverage, if necessary, for the staff, either volunteer or paid professionals, to cover any kind of professional claims. Another is D&O and possibly the employment practices liability policies.”
An SPCA-type operation will also typically have a diverse auto exposure. “They’ll have vans, sometimes travelling around a large geographical area, picking up strays or wounded animals, sometimes in somewhat hazardous conditions, like on the side of a freeway,” Moody explained.
Churches and temples
Billie Neilson, manager and commercial underwriter for Arrowood Insurance Services in Modesto, Calif., which specializes in coverages for churches and particularly Japanese temples, said volunteers are definitely an area where she finds major claims issues in the nonprofits arena.
“We always recommend the voluntary comp on the workers’ comp,” Neilson said. “It can be costly because you’re dealing with people who really don’t climb on the roof every day or cut down trees…Everybody wants to help out and those are the ones that get hurt. They’re really not covered under most policies.
“[The temples] have their Obon festivals and different conventions, and there are always volunteers who come out and help make the food and help with the different booths,” Neilson said. “It so happens that, cutting food, they’ll [maybe] slice their finger. It gets pretty major sometimes, and it’s not covered if they don’t have voluntary comp. [However,] a lot of people don’t want to pay the extra.”
Neilson added that for churches there is a D&O coverage that should always be put on the policy. “When someone is volunteering for an organization and is on the board, if the church doesn’t have that D&O coverage, that board member could be vulnerable to lawsuits for any decisions that the board makes as a body.”
Social service organizations
Many companies shy away from writing coverages for nonprofit social service organizations, but, according to Bob Nasits, president of Care Providers in Texarkana, Tex., those are the only nonprofits his company deals with. Such organizations include community action agencies, head-starts, passenger-carrying transportation services, meal delivery services, youth and senior programs and childcare organizations as well as groups involved with handicapped or developmentally disabled individuals.
“If you’re not attuned to the fact that a social service organization is using volunteers, and you don’t put extra coverages on there, then you’ve left them with a pretty significant gap in coverage,” Nasits said.
Nasits said there is a disinclination on the part of the vast majority of standard companies to write social service organizations for several reasons. “A lot of them involve passenger-carrying vehicles, so you’re getting a relatively low premium for a relatively high exposure,” Nasits said. “You could have six, eight, 10, 15 passengers killed or injured.
“Plus, a lot of social services organizations are into oddball-type things, either in the fund-raising arena or just in the different programs they insure,” Nasits continued. “For example, we looked at one that was building homes for the poor, and they were using prisoners that were released during the day for the work-duty programs. They were under no particular supervision other than [that of] the social organization.”
Nasits said the way to overcome such scenarios is to develop a specialized program and write enough premium to cover the “shock losses” that may ensue.
Other problems can arise with D&O. “About 90 percent of the D&O claims are in the employment-related practices area,” Nasits said. “Often, social service organizations try to spend as much money as they can on the services they provide, and they tend not to spend extra money in human resource directors…But there’s no lessening of the desire from the employees to sue…That’s why we now provide our own human resource services for our clients.”
In addition to providing protection for volunteers through a volunteer accident policy, Nasits said volunteers are automatically added as additional insureds under a general liability policy. “There are also some auto implications for liability for volunteers operating their own personal vehicles for the insured organization. That is a separate coverage under the auto policy,” he said.
According to Komar, any operation whose primary exposure is volunteers using their own vehicles [such as a meals-on-wheels program] is a challenge in terms of providing the best insurance for the organization.
“It’s a very difficult exposure to control. Volunteers come on board and leave-there’s a lot of turnover,” Komar said. “A lot of people use their own vehicles that are not maintained…It’s the insurance company’s responsibility to properly screen these volunteers as far as motor vehicle reports and make sure that they have a copy of the personal auto policy in that agency’s file.”
Nasits said the ability of nonprofit social service organizations to get the coverage they need has improved quite a bit in the past five years, noting that there are now several major programs for social service entities.
Furthermore, he notes that there is a growing tendency for agents to use programs, not just in the social services arena but in other areas where insurance is difficult to get and is somewhat specialized. “You use a program, and it helps the regular mainstream agent to be more efficient,” Nasits concluded.