Dear Rita: I recently read an article that said it was a good idea to have insurance for volunteers. I thought volunteers had immunity in both federal and state laws. Should I be doing something to protect my nonprofit? Signed, Curious in California
Dear Curious: Volunteer immunity laws are common, but they almost always contain a provision that the volunteer's immunity only applies to claims that exceed the insurance policy limits carried by the nonprofit. That means both the nonprofit and/or its volunteers need to have coverage available to provide a defense to lawsuits that have a monetary value that is less than the policy limits -- and almost all of them fall within that category (e.g., a fender bender with minor property damage or injury). In addition, volunteer immunity laws do not prevent claims against the nonprofit brought by one of its volunteers.
Some (Unfortunately True) Worst Case Scenarios
What can happen, really? A lot, actually. Here are some claims scenarios culled from over 20 years of data at the Nonprofits Insurance Alliance Group.
- A volunteer on agency business ran a stop sign and hit a vehicle whose driver wound up paralyzed from the neck down. The volunteer's own personal coverage had lapsed, so the agency's auto coverage became primary and the claim was settled for the $2,000,000 in available limits.
- Volunteers were clearing a field and one of them, while using a chainsaw, sent a flying object into the eye of another volunteer. The sight in that individual's eye was lost and the claim settled for more than $1 million.
- A volunteer sexually abused multiple children over a four-year period. The nonprofit had not provided adequate supervision and was held responsible for $4,000,000 in claims.
- A volunteer claimed that the nonprofit had discriminated against him because of his sexual orientation. The claim settled for $750,000, most of which was for plaintiff attorney fees.
- A volunteer slipped and fell on the nonprofit's floor and fractured her hip. She sued the landlord who turned out to be an additional insured on the nonprofit's insurance policy. The claim settled for $550,000, which included a Medicare lien.
Average Cost of Claims
The examples above may represent the headliners, but even the average costs of claims are still not negligible for most nonprofits. Here are the average costs of claims brought by or against volunteers:
- General Liability - $12,000
- Auto Liability (with injury) - $6,000
- Social Service Professional - $62,000
- Improper Sexual Conduct - $78,000
And even when a claim does not have merit, someone has to defend the volunteer and the nonprofit.
How You Can Protect Your Volunteers
So by now you probably realize the answer to your question (Should I be doing something?) is yes. Obviously, it is important to have appropriate insurance in place to cover the nonprofit's various exposures (auto, premises liability, professional, sexual misconduct). Make sure that these policies include volunteers as additional insureds. This not only has the benefit of protecting volunteers if they are sued, but also makes your organization more attractive to volunteers who know they have insurance coverage in place while doing their volunteer work.
In addition, make sure the activities your volunteers engage in are as safe for them as they are for the general public. This risk management approach minimizes the adverse effects of losses that do occur, demonstrates your due diligence, makes your nonprofit an attractive "risk," and can, in some circumstances, meet funder/insurer minimum requirements.
Finally, consider Volunteer/Participant accident insurance if your organization is large enough. This will typically provide excess insurance over group insurance (if there is any) on a no-fault basis. Also, some states allow volunteers to be covered under workers' compensation policies. This would provide no-fault insurance coverage for injuries to the volunteer incurred while volunteering. Check with your insurance broker or agent to see if this type of coverage is right for your organization.
Chuck Hewitt is Claims Technical Director at the Nonprofits Insurance Alliance Group. Prior to this position he held successive executive positions with Liberty Mutual, Western Employers, Industrial Indemnity and Zenith Insurance Companies. Chuck is a past president of the Los Angeles Claim Managers' Council, past national co-chair of the National Association of Independent Insurance Adjusters National Advisory Council (on which he still sits), and a Past President and member of the Board of Directors of Big Brothers Big Sisters of Santa Cruz County. His dog Lucy claims to know nothing about insurance.
See also in Blue Avocado:
- A Board Member's Guide to Nonprofit Insurance by Pamela Davis
- What Should Boards Know About Insurance Brokers? by Pamela Davis
And an excellent booklet is available free from the Nonprofits Insurance Alliance Group here.