Legal Action Against Nonprofits: A growing concern Presented by: Richard E. Mel Whiteley CPCU RPLU Senior Vice-President AH&T Insurance
3 rd Party Liability Claims The Parties 1 st Party You (Defined differently in different policies) 2 nd Party The Insurance Company 3 rd Party Everyone else in the world
What is a liability claim? A claim is a: Written or verbal demand for damages Written demand for money Judicial, civil, administrative, regulatory, or arbitration proceeding Written request to waive a statute of limitations applicable to any actual or potential suit Criminal proceeding commenced by the return of an indictment
What is NOT a liability claim No trigger, No claim! Invitation to an informal meeting with DOJ Complaint about working conditions Slip and fall with no demand Threat to sue with no accompanying demand
Typical Liability Claims Employment practice (90% of NP management liability claims) Bodily injury on or off premise Property damage Automobile Anti-trust Standards, certification, accreditation Privacy violations
EPL Claims on the Rise 2010 Employment Practice Claims Racial discrimination - up 6.9% Sex discrimination - up 3.6% ADA violations - up 17.3% Age discrimination - up 2.1%
Frequency vs. Severity Frequency Employment Practice Anti-trust Bodily Injury/Property Damage Media (Publishing) Severity Organization Management Anti-trust Bodily Injury/Property Damage Privacy Infringement Standards, Certification, Accreditation
Unusual Claims Tiger bite at a trade show Student killed after falling from a parade float not sanctioned by the association Trademark infringement two organizations with similar names. Pre-emtive suit to stop organization from interfering with plaintiff s activity. Student sued organization to reinstate scholarship after having dropped out and returned several years laterclaimed discrimination. School sued by parents because it changed from Catholic to secular.
How Does Insurance Respond? General Liability Bodily Injury Property Damage Personal and Advertising Injury
How Does Insurance Respond? Management Liability (D&O) (EPLI) (Fiduciary) Employment practice claims Mismanaging the organization s money Mismanaging the operations of the organization Basic publishing exposure (Copyright, plagiarism, libel) Mishandling employee benefits
How Does Insurance Respond? Cyber Liability Loss of private information Failure of dependent systems
How Does Insurance Respond? Errors and Omissions Professional exposure Lawyers, medical professionals, engineers, etc. Standards, certification, accreditation Education, coursework, testing
How Does Insurance Respond? Media Liability Basic publishing/media exposure Errors and omissions in media related activities
Claims Made vs. Occurrence Occurrence General Liability Auto Liability Addresses claims based on incidents occurring during the policy period
Claims Made vs. Occurrence Claims Made Management Liability (D&O, EPLI, Fiduciary) Errors and Omissions Addresses claims that are made during the policy period
What is Your Responsibility? Policy Conditions You must receive permission prior to incurring legal expense You must provide all information requested by the insurer You must report the claim in accordance with the language of policy conditions.
When There is a Claim Contact your broker or the carrier Follow instructions Provide requested information Don t hold back Remember: A liability claim is not a burning building
What About a Maybe Claim? Knowledge of incident that could result in a claim Lock potential claim into today s policy Switch carriers new warranty statement Reporting not mandatory Laundry listing
Summing It Up Not a claim unless the trigger has been pulled Individual policies form a program of protection from liability claims Claims are on the rise in most categories with employee claims leading the way A liability claim is not a burning building