Insuring volunteers…the wrong way and the right way

In a discussion with your insurance agent, you might have asked, “What happens if a volunteer accidentally hurts someone, or damages someone’s property? What happens if they are injured, themselves?”

In all likelihood, the agent replied, “You’re covered. Volunteers are included on your general liability policy.”

Sigh of relief? Understandable, but the wrong response to that answer!

Don’t share your own limits of liability with volunteers

It’s one thing to want to protect your volunteers from a liability claim by a third party; it’s another to allow your organization’s own insurance coverage to potentially be exhausted by giving volunteers access to your total limits of liability.

Suppose you have selected a limit of $1 million per occurrence on your general liability policy. A volunteer injures someone accidentally, or damages their property, and that someone sues both the volunteer and your organization, claiming negligence. Suppose further that the judgment or settlement exceeds $1 million. The insurance company’s financial responsibility is capped at $1 million.

Where will the rest come from?

From the volunteer, perhaps someone you barely know? Unlikely. Can your organization afford an out-of-pocket loss of several hundred thousand dollars? With a $1 million claim on your account, will your insurer be willing to renew your organization’s policy?

If you include volunteers on your general liability policy, you are hardly alone. Most nonprofits do, simply because the insurance company does not charge extra to include them. But be aware that sharing your liability limits with volunteers creates a severe financial risk.

So, what to do? Fortunately, volunteers can be – and should be – insured separately from the organization. You can provide each volunteer a liability policy designed specifically for volunteers, with a limit of $1 million, just in case something bad happens and they are held responsible. The cost? Less than the cost of lunch, a T-shirt, or a movie ticket, per year.

With that separate policy in place, you can instruct your insurance agent to remove volunteers from your general liability policy. (It’s simple to do.) Now your full limits of liability are available for the organization, and volunteers have protection, too.

You can learn more about this approach to liability protection for volunteers and your organization here.

What about volunteers who drive?

If you have a commercial automobile policy, it most likely excludes coverage for volunteer drivers, except in narrow circumstances. If volunteers drive their own vehicles as part of their assignments, your organization can protect itself with a “nonowned and hired” auto policy (not expensive) and protect volunteers with an excess automobile liability policy. The excess policy provides the volunteer up to $500,000 in extra protection in the event his or her personal auto policy’s limits are insufficient for an accident the volunteer causes. The excess auto policy, like the volunteer liability policy described above, is less than the cost of a lunch.

Volunteer injuries

Injuries are, by far, the most common kind of claim involving volunteers. The “medical payments” provision of your general liability policy can be inadequate, for serious injuries. Remember, your directors and officers liability policy requires that you maintain adequate insurance for known risks.

The good news – You can protect volunteers with an accident policy providing up to $50,000 in treatment costs for – that’s right – less than the cost of a lunch.

Volunteer insurance is a benefit, and a great recruiting tool

Everyone is competing for good volunteers. Volunteers know they have risks. The organization that offers liability and accident protection for its volunteers has an advantage over others, as well as a great way to say “thank you” to these great, unpaid human resources. Coverage is available and affordable throughout the U.S., Puerto Rico, the Virgin Islands, and the District of Columbia, even for organizations on very tight budgets.

Learn more, at our March 12 Webinar

Better Impact is hosting a Webinar, “The Value of Volunteer Insurance,” March 12. I will be joined by one of VIS’s long-time clients, Heidi Powers of Northeast Michigan Community Service Agency, to describe how volunteer insurance works, why volunteer insurance and risk management should be an integral part of a nonprofit organization’s operations, and the features to look for in volunteer insurance policies.

You can register for that Webinar here.

About VIS

Volunteers Insurance Service Association, Inc. (VIS) was established in 1972 for the purpose of providing insurance and risk management services for volunteer-based organizations. Contact us at (800) 222-8920, or volunteers@visvolunteers.com, for more information on our programs and services. VIS is an official partner of Better Impact.