Liability Insurance: What exactly is it and do I really need it?

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1 Liability Insurance: What exactly is it and do I really need it? by Monica Romig Green One of the benefits that comes with membership in ESDA is access to liability insurance. Up until this month, we were only able to offer access to insurance for members living in the US, but we are pleased to announce that we are now able to offer it to ESDA members living in Canada as well! In light of this, we thought we d take some time to talk about what liability insurance is, what it covers, and some other information that will help you determine if you should consider investing in liability insurance. PLEASE NOTE: This information is being offered for your edification and should not be construed as expert advice. As always, if you have questions about your particular circumstance, it is best to seek out professional insurance and legal advice. What exactly is liability insurance? It s helpful to think of liability insurance like we think about car insurance; it s a good thing to have in place just in case something goes wrong unexpectedly. In the course of your work as a spiritual director, if someone were to sue you for such things as professional negligence, bodily injury or damage to the premises where you offer direction, liability insurance would help cover the costs of any judgments decided against you and any reasonable costs related to legal proceedings and investigations. Should someone bring a legal claim against you, like with car insurance, the insurance company would investigate the situation and defend your case, even if it s groundless or fraudulent. Most often, they would work to reach a settlement that all parties agree to, and then pay that settlement. Why would a spiritual director need to have insurance? Sadly, we live in a litigious world, and people come up with all kinds of reasons to sue one another, even fraudulent ones.

2 Page 2 If you are the sole-proprietor of your spiritual direction ministry that is, if you receive any income directly from your directees then if someone were to bring a claim against you, they would have access to not just your spiritual direction income, but to all of your personal assets as well. That means if someone were to sue you, everything you own savings, property, investments, etc. would be at risk. With liability insurance, you not only have that financial help during litigation, you also have the insurance company fighting on your behalf. Additionally, organizations responsible for any locations where you offer may spiritual direction such as churches, seminaries, ministry buildings, etc. will feel much more comfortable allowing you to offer spiritual direction on their premises if you have liability insurance. If not, the organization itself is at risk and could be held liable should someone choose to sue you for anything that happened as a result of your spiritual direction work. How likely it is that someone would bring a claim against me? It s true that it is probably unlikely that someone would sue you. I have met and worked with numbers of spiritual directors since 2005, and I have yet to meet one who has had a case brought up against them. Additionally, the premiums (yearly payment) for liability insurance for spiritual directors is quite low, which means that even the insurance companies do not anticipate there being many claims for them to handle. However, just because the risk is low, it does not mean that the risk is not present. Even with all the care we take such as, upholding to ethical standards, having covenants/agreements with our directees to help them understand what spiritual direction is and isn t there is always a chance that someone might decide to take us to make a claim against us. So liability insurance covers the general legal costs if someone sues me. Are there kinds of claims that it doesn t cover? Different insurance policies can vary in the details of what they ll cover. So be sure to thoroughly read the policy you are purchasing. (If you need any assistance in understanding insurance-speak, contact us at ESDA. We ll try to help.) In general, though, professional liability insurance does not cover costs related to any dishonest, fraudulent or malicious criminal activity on your part. For a claim of sexual misconduct, insurance companies tend to lower the amount of costs they will cover. But if you are found guilty, that is considered a criminal activity, and the insurance company will then cover none of the costs. They also don t cover damage to any property that you own or rent. If you are offering spiritual direction out of your home, you should check with your home-owner s insurance to see what they will cover. If you are renting an office in a building, check with the property manager to see what kind of additional insurance they recommend you have in place.

3 Page 3 I don t charge any kind of fees for offering spiritual direction, so I don t need to have insurance, right? It depends. As I mentioned above, if you are offering spiritual direction at a location connected with another organization like a church, seminary, school, or ministry the organization may be held liable for your work. If you don t want to purchase your own liability insurance, check with an administrator in the hosting organization to confirm that their insurance covers your acts as a volunteer. If you are still a student doing spiritual direction for your practicum, your direction work should be covered by your training program, particularly if you are doing your direction work on their premises. Check with an administrator of your program to confirm what their insurance covers. I work for a church/ministry/missions organization. Might my spiritual direction work already be covered by their insurance? It very well could be! Often churches or ministry organizations already have insurance policies in place that cover any work done by their employees on their behalf, even if that work is done off of their premises. If you are in such a situation, check with an administrator at your organization to see if your spiritual direction work is already covered. However, if your spiritual direction work is financially separate from your work at your ministry employer meaning you receive any income directly from your directee then your employer s coverage may not apply to that work. In that case, acquiring liability insurance would be wise. Do I have to be a member of ESDA in order to obtain liability insurance as a spiritual director? Not necessarily, but it certainly helps! Most insurance companies don t want to cover someone who would be considered a risk. Insurers have found that people who are members of a professional association prove to be less of a risk, since the association members have agreed to uphold certain ethical standards. Someone outside of a professional association has to prove to the insurance company that they are a good risk, which can involve a lengthy investigatory process, which the insurance company may or may not be interested in taking on. ESDA has worked directly with American Professional Agency in the US and Holman Insurance Brokers in Canada to provide access to their liability insurance policies for our members. This does not mean that they will automatically accept you; you still have to pass through their application process. But being a member of ESDA goes a long way towards their acceptance of your application.

4 Page 4 I m ready to get acquire liability insurance. What do I do now? Sign into our ESDA Members Only section of our website. Under Professional Resources, go to Acquiring Liability Insurance. That will take you step-by-step through what you need to print from the online application. After that, simply give us a call at ESDA We will personally walk you through the application process. Insurance lingo can sometimes be confusing, and we can help make the process clearer and easier. We hope that this article has been helpful in explaining what liability insurance is and why it might be a good idea to consider getting a policy for your spiritual direction work. If you have any questions at all, just let us know: esda@ecswisdom.org.

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