Ask Rita: Do We Need Insurance for Our Volunteers?

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:

And an excellent booklet is available free from the Nonprofits Insurance Alliance Group here.

Comments (7)

  • Anonymous

    I'm the president of our homeowners association, a nonprofit. We have insurance that includes directors and officers. Recently we got a second policy to cover legal costs in case of a suit. The limits of the first were increased by a previous board, and I was responsible for the second policy, based on advice of an attorney for the HOA. The reason for both is a homeowner, a retired attorney, who tends to threaten a lot when things don't suit him. Because of the increased insurance, our annual fees will have to be increased, which also won't suit him. He claims we don't need any insurance, since we are all volunteers. What's a good response to someone like that?

    Oct 23, 2013
  • Anonymous

    Definately a good article to read for someone as a CSR!

    Oct 23, 2013
  • Anonymous

    Almost all nonprofit board members are volunteers. They are held to the same fiduciary responsibilities as for-profit board members. This includes any personnel actions they take or ratify. For these reasons alone every nonprofit should have Directors' and Officers' liability coverage that will defend and indemnify both the organization and its board (as well as other key personnel such as directors, employees and volunteers, and if applicable, committee members, interns and students in training). Chuck Hewitt

    Oct 23, 2013
  • Anonymous

    We were advised by our insurance company that the Volunteer Protection Act covers directors and officers from liability when officers have acted in good faith and that the reason to have coverage was to cover legal costs. We reduced our D&O policy from $1 million to $500,000. Does this seem reasonable?

    Nov 01, 2013
  • Both the Federal and State Volunteer Protection Acts vary in the scope of the protection afforded, the immunities provided up to insurance limits, and the types of fiduciary responsibilities (such as acting in good faith) protected. The State you are in, the size of your nonprofit, the judicial climate, and other factors would determine appropriate D&O limits, which your broker should be able to help you assess. There is also a liability exposure should a judge or jury determine your Board had not acted in good faith.

    Nov 08, 2013
  • If you include volunteers on your organization's own liability policies, just remember you are sharing your policy limits with volunteers. Do you really want to risk degrading your organization's limits, and having your claims experience affected and premiums increased, because of something a volunteer might do (maybe a volunteer you really don't know very well)? You can insure volunteers separately, and protect your limits, while still providing a valuable benefit to the volunteers. If volunteers are included on your business auto policy, they are covered only for incidents that occur while "transporting your clients or other persons," and are not covered for claims by other volunteers or employees who might be riding with them. As far as including volunteers on workers' compensation policies is concerned (in states where that is an option) -- Very expensive. Accident medical insurance is MUCH less expensive, if you are willing to accept a limit of $50,000. William Henry, CIMA Volunteers Insurance

    Jul 15, 2014
  • Anonymous

    I was the director of risk management for one of the largest camps in southern California. we used both brotherhood and church mutual. for volunteers, we found that it was better to offer the volunteer compensation in the way of a meal, and then cover them under workers comp. turned out to be best coverage, lowest cost. offering compensation was the key; in many cases the volunteer declined it, but we could still insure the risk this way.

    Oct 06, 2014

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