Nonprofit organizations seeking insurance in California
face a variety of liability exposures and policy
options. Each type of liability exposure corresponds to
a different category, but, in reality, each category is
truly defined by the type of insurance coverage that
relates to it. The main liability exposures facing
California nonprofit organizations in today's world are:
• General
Liability Exposures – For any California non-profit
seeking to obtain insurance, general liability coverage
is the most basic and will respond in cases of bodily
injury as well as advertising injury, often required by
landlord to occupy space. Can often be found on a
BOP.
• Workers'
Compensation – Workers' Compensation is required
under California State law for any organization with
employees. Often Principals and shareholders can be
excluded.
•
Professional Liability – Covers professionals for
negligent acts that cause injury to clients. Often
termed E&O this coverage an cost varies widely and
depends on the profession.
•
Employee Practices Liability Insurance – AKA EPLI
will protect the business from suits that originate from
wrongful termination, discrimination and other
violations of California State employees’ legal rights.
• Fiduciary Liability – It is a fiduciaries legal
responsibility to safeguard assets of beneficiaries.
Many California non-profits hold funds in the trust or
employees (401 K, pensions, etc) or on behalf of other
organizations. Fiduciary Liability coverage will respond
should an organization mishandle funds.
• Auto Liability – IF the organization owns vehicles
this coverage is similar to any auto liability coverage.
*Your organization may have this exposure even if it
does not own vehicles. Does anyone run errands, deliver,
or drive during the course of doing work?
• Directors and Officers
Liability – Will cover directors and officers for
negligent acts that can result from acts or omissions
that cause suits to be brought against the organization.
This coverage can be expanded in some cases to cover
EPLI.
General liability exposures are also called office
liability coverage or premises liability. These
liability exposures are the most commonly insured and
are usually found as part of a package. These packages
offer building and contents coverage, as well as other
components. The Insured Perils that are covered by this
are:
• Bodily Injury – This means injury, sickness or disease
as it applies to any single person within the scope of
the policy. However, the injury must be sustained after
the policy period. It also includes death resulting from
any injury that falls into this category.
• Property Damage – This refers to physical destruction
or damage of any tangible property that occurs when the
policy is in force. This includes the loss of property
and the loss of property use at any time because of the
damage. It also applies to tangible property that has
not been damaged or destroyed, but of which you have
lost the use, during the policy coverage.
• Personal Injury Offenses – Personal Injury Offenses
cover several areas that are not covered by Bodily
Injury. These include false arrest, detention or
imprisonment, malicious prosecution, slander in oral or
written form, libel in oral or written form, and
violation of privacy in either oral or written form.
There are two parts to Workers' Compensation coverage in
the state of California; one part is designed to provide
statutory benefits for the employee who was injured,
while the second part is entitled Employer's Liability
coverage and affects the benefits to the employer of the
injured worker.
Employers are required by law to provide specific
benefits to any employee injured in the workplace or "on
the job." The employee gives up the right to take direct
legal action against the employer in exchange for these
benefits. However, the employee is entitled to take
action against any third party involved in the
situation. This third party can then take legal action
against the employer. Employer's Liability is the part
of the policy that protects you in claims involving a
third party.
For instance, if an employee is harmed by malfunctioning
equipment, that employee can take legal action against
the manufacturer of the equipment. However, the
equipment manufacturer can take action against the
employer if the correct maintenance and safety
precautions were not followed. Employer's Liability
protects the employer in this instance.
Please note that in the state of California
Workers'
Compensation coverage is mandated by law and is
required at all times. If an employee is injured and the
employer does not have Workers' Compensation coverage,
there is no defense or protection afforded the employer.
The employer will have to pay the statutory benefit to
the employee, regardless of the employer's current
financial situation. Even bankruptcy does not protect
the employer from this. During the legal action,
personal assets of directors and officers can be seized
and Directors and Officers coverage will not protect
them, or the employer from this action.
Professional Liability is covered by Directors and
Officers Insurance, but there are several vital reasons
that an employer should not rely solely on this
protection.
Bodily Injury Claims Not Protected by Directors and
Officers Insurance
In certain nonprofit organizations such as counseling
centers or treatment clinics, it is possible that the
act or decision of any professional within that
organization will lead to a bodily injury lawsuit.
Directors and Officers Insurance does not protect
against this circumstance. General Liability Insurance
does provide coverage for bodily injuries, but not for
professional liability exposures. A Directors and
Officers Insurance policy may specifically denote a lack
of coverage for certain types of business practices that
occur in an organization.
Coverage for Employee Benefits Liability Exposure
This type of insurance provides vial protection in the
event of human resources errors during the
administration of employee benefits. For instance, any
liability arising from incorrect or falsified
information within COBRA, Workers' Compensation, any
group health policy or any other employee benefit can be
insured through this type of policy. In addition, an
employer can extend this coverage from General Liability
Insurance; however, Directors and Officers Insurance
does not offer this protection in most cases.
Exposure to Fiduciary Liability
Fiduciary Liability is the direct result of an
accusation of poor financial advice, or when promised
results fail to appear within the specified or
reasonable amount of time. Directors and Officers
Insurance will provide a minor amount of protection
against these claims; however, pension investment
recommendations are not covered. A wide range of
financial choices and a third party administering your
pension plan will help reduce the risks involved in this
instance.
This area covers any liability related to owning or
operating an automobile. If you own any vehicles, this
type of insurance is required. However, even if you do
not own any vehicles, this type of insurance can offer
benefits. For instance, hired and non-owned liability
insurance coverage can be added to any type of General
Liability policy. Hired physical damage coverage can
help you waive fees associated with car rentals, as
well.
As mentioned earlier, this is an extremely gray area,
entailing numerous types of coverage to protect in the
instance of a vast number of exposure types. You will
find more information within the Directors and Officers
Insurance portion.
- Arroyo has been in operation since 1986
- Choice - Over 35 A Rated Carriers
- Dedicated account manager
- 4 Hour turn around on certificates
- Loss prevention program
- Workers Comp Claims Management
- Personalized Risk Assessment
- 98% Client Retention rate
