One crucial aspect to help protect associations from liabilities and unforeseen events is ensuring a tailored insurance program is in place. The program should address the risks and needs of associations. It should balance the need for robust coverage and protection with cost effectiveness. In this article, we will look into the importance of tailored insurance programs for associations. We will explore the risks they face, the need for insurance, and the benefits of custom insurance solutions.
Understanding the Risks Faced by Associations
| Associations operate in complex ecosystems. They face many risks and liabilities that need careful consideration. These risks stem from their diverse activities, engagements, and responsibilities. For example:
• Associations who organise events and conferences expose themselves to potential liabilities from accidents, injuries, or property damage.
• Associations typically have board members and executives have governance and management responsibilities. They could face legal claims for alleged mismanagement, breach of duty, or negligence. | • Associations often have a duty to protect their members and participants, and any harm or negligence can lead to liability claims and reputational damage.
• Associations like most traditional for profit businesses operate in the digital age, and face cybersecurity and data protection risks, with sensitive member information being vulnerable to data breaches and cyberattacks.
• Associations may own or lease property and assets critical to their operations, making asset protection a significant concern. |
The Importance of Insurance
for Associations
| Insurance holds great importance for associations in mitigating risks and safeguarding their operations. It has many key benefits. They help the association stay strong and last long.
First and foremost, insurance offers financial protection against unexpected events and losses. Organisations can face big costs from liability claims, property damage, or other surprises. Appropriate insurance coverage helps associations reduce financial risk and ensure their long-term viability. The right insurance can help protect association assets and operations. It can cover property damage, theft, and other dangers that may disrupt their activities. | Insurance also helps associations meet legal and contractual requirements. Many associations must take out certain insurance coverage. This can be required by law or in contract. For example, they may need liability insurance to hold an event at a specific location.
Furthermore, insurance enhances credibility and trust among association members, sponsors, and partners. It shows the association is committed to risk management and to protecting its stakeholders’ interests. Finally, insurance provides peace of mind to association members. They know their organization has taken steps to manage risk and protect their interests. |
The Benefits of a Tailored Insurance
Program for Associations
| A tailored insurance program is made specifically for associations. It offers many benefits that fit their unique needs and risks. First, customised coverage ensures that associations receive comprehensive protection against the specific risks they face. Generic insurance policies may overlook certain risks or provide too little coverage. But, a tailored program addresses the association’s distinct activities, events, and operations. | Second, a tailored insurance program provides essential protection against liability claims. Most associations interact with members, participants, and the public. If accidents, injuries, or property damage occur, associations may be held liable. A tailored program offers liability coverage tailored to the association’s specific risks, safeguarding against potential legal claims and the financial losses associated with them. |
Working with an Insurance Broker
| Insurance is complex. It’s a mine-field. Identifying the best coverage options can be hard. This is where the expertise of insurance brokers is invaluable, especially those who specialize in association insurance. An insurance broker is a trusted advisor. They offer guidance and help during the insurance process.
When working with an insurance broker, associations benefit from the broker’s deep understanding of the unique risks faced by associations. Knowing the industry is vital. It helps assess the association’s needs accurately. It also helps recommend custom insurance solutions. | The broker can identify potential coverage gaps by analyzing the association’s risks and exposures. This ensures the insurance program addresses these areas of vulnerability.
Insurance brokers also have access to a wide network of insurance providers. This allows them to get competitive quotes and negotiate good terms for the association. By leveraging their relationships with insurers, brokers can secure comprehensive coverage at competitive rates. This maximises the value of the association’s insurance investment. |
Tailoring Insurance Programs to
Association Needs
| Tailoring insurance programs to fit the needs of associations is crucial. Associations operate in many sectors. An experienced insurance broker understands the complexities of association insurance. They can design a program that fits the association’s activities, risks, and budget.
During the customisation process, the insurance broker works closely with the association to assess its needs, identify potential risks, and determine the appropriate coverage options. | This team approach lets the insurance program be tailored to the association’s needs. It gives robust protection against the identified risks.
By tailoring insurance programs, associations can have more peace of mind knowing their unique risks are covered. They can confidently pursue their mission. They can engage in activities and make decisions. |
Tailoring Insurance Programs to
Association Needs
| Tailoring insurance programs to fit the needs of associations is crucial. Associations operate in many sectors. An experienced insurance broker understands the complexities of association insurance. They can design a program that fits the association’s activities, risks, and budget.
During the customisation process, the insurance broker works closely with the association to assess its needs, identify potential risks, and determine the appropriate coverage options. | This team approach lets the insurance program be tailored to the association’s needs. It gives robust protection against the identified risks.
By tailoring insurance programs, associations can have more peace of mind knowing their unique risks are covered. They can confidently pursue their mission. They can engage in activities and make decisions. |
We are a specialist insurance brokerage with an emphasis on adding value to our clients by helping them make an informed decision. Our approach combines that of an insurance broker and consultant, where we focus on providing expert advice to our clients while customising their insurance program and risk management solutions.
Since starting in 2013, KBI is constantly growing and becoming a leader in the Australian market. Our primary point of difference is that we don’t try to be all things to all people. We work in niche areas, where we can tailor an offering, advice and broker support to meet the specific area’s needs.
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Why does a Not-for-Profit or Professional Association need this cover?
|
Protection for directors / members from mismanagement of the association and related occurrences (Directors & Officer Insurance). Protection for the association Protection for the association | Provides defence costs for the Directors & Officers and Association when a wrongful act or allegations of a wrongful act have occurred.
Recruitment of key people: |
What does Association Liability insurance cover?
Directors & Officers / Office Bearers Liability
| This section provides cover for wrongful acts committed by the principals, partners, trustees, directors and officers of the association from possible lawsuits arising out of any error, misstatement, omission, neglect, negligence, breach of duty, breach of confidentiality, and mismanagement. | This is similar to the liability cover provided by Management Liability and Directors & Officers policies. |
Association Reimbursement
| This section provides cover for the same claims scenarios as Section 1 (D&O) but is only triggered when the association has had to indemnify (pay) the insured individuals. | It is reimbursing the association for these costs, whereas section one is directly covering the insured persons directly. |
Professional Indemnity
| This section provides cover for the association from a breach of professional duty resulting in a financial loss. | This includes cover for the handling of memberships, creating and managing curriculums, setting policies and guidelines, etc. as well as the provision of advice at seminars, or through newsletters, websites, workshops, etc. |
Association Liability Cover
| This section provides cover for a wrongful act committed by the association which has resulted in a legal action where the association is named in the lawsuit. |
Crime / Employee Theft Protection
| This section provides cover for a range of crime related occurrences when there has been a direct financial loss. | This can include employee fraud or dishonesty, third party crime, electronic and computer crime, etc. |
Employment Practices Liability (EPL)
| This section covers the association from alleged Employment Practices breaches, such as: harassment, discrimination, bullying, wrongful/unfair dismissal, etc. |
Statutory Liability / Fines & Penalties
| This section provides cover for fines and penalties incurred by the association when there has been an alleged statutory breach, such as: OH&S, employment practices laws, workers compensation laws, industry specific rules & regulations, etc. |
Please note that each insurers product and policy wording can vary. Please consult your broker for the most suitable option.
Exclusions
Personal Conduct Exclusion
| This is a standard exclusion that excludes dishonest or fraudulent acts committed by an insured. | However, most policies defend the insured until final non-appealable adjudication and policies typically include clauses which state conduct by one insured shall not be imputed to other insureds. |
Insolvency Exclusion
| This exclusion removes any coverage if a claim arises out of insolvency. | It can potentially be removed if the association can show they are in a good financial position and can cashflow the company for 12-18+ months. |
Bodily Injury / Property Damage
| The policy will not respond to a Bodily Injury & Property Damage claim, as this exposure is typically covered by a Public Liability policy. | This exclusion usually has a write back (gives coverage back) for Defence Costs & Legal Costs, Employment Related Wrongful Acts and Security Claims. |
Retroactive Date Exclusion
| This excludes any wrongful act committed or alleged to have been committed prior to the inception of the policy. | This is a way for insurers to exclude past acts and make the policy only forward looking. |
Insured Versus Insured
| There are many variations to this exclusion, but the main purpose is to not cover a dispute between insureds. I.e. a director or employee vs. the organisation. |
Prior & Pending Exclusion
| This exclusion states that the policy will not cover any pending or prior litigation involving the Company that has begun before the Prior & Pending date of the policy. |
This list is not exhaustive and there may be additional policy exclusions applicable to your policy. Please consult your broker or insurance advisor for the exclusions applicable to your policy.
Landmines
| Association Liability insurance is a complex product and should be structured accordingly. Full disclosure and monitoring throughout the year is important to ensure coverage will respond in a claim. | Here are some areas to watch out for when managing an Association Liability policy: |
Disclosure
| In basic terms, an insured must disclose any matter they know to be relevant to the insurer’s decision to accept the risk. | Continuous disclosure is also very important: If there is any material change to the association/organisation during the policy period, these must be notified to the insurer. |
Claims Made Policy
| Timing is extremely important, especially when it comes to reporting claims as these policies are written on a Claims Made policy form. This means that in order to trigger a claim, the demand/claim must be reported, and indemnity granted during the period of insurance. | So, if a policy is lapsed and a claim is reported after the policy period, the claim could be denied. |
Confusing Terminology
| Association Liability is a broad term that can be confused with other insurance coverages. For example, Association Liability is not “Public Liability” and does not include “Workers Compensation” or “Voluntary Workers” insurance. | There are several insurance policies that also need to be considered when reviewing an Association’s overall insurance program; this should be reviewed with your broker/insurance advisor. |
Exclusions
| It is crucial to understand your policy’s exclusions, what they mean and how they would apply to your specific association/organisation. |
Claims Example
| Members can be a common source for claims, alleging breach of duties by the board of directors.
Regulatory authorities
Employees and Volunteers | Customers/Clients can sue for misleading or deceptive conduct or third- party Employment Practices Liability claims
Creditors |
We are a specialist insurance brokerage with an emphasis on adding value to our clients by helping them make an informed decision. Our approach combines that of an insurance broker and consultant, where we focus on providing expert advice to our clients while customising their insurance program and risk management solutions.
Since starting in 2013, KBI is constantly growing and becoming a leader in the Australian market. Our primary point of difference is that we don’t try to be all things to all people. We work in niche areas, where we can tailor an offering, advice and broker support to meet the specific area’s needs.
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