Not For Profit and charitable associations provide invaluable services to the community, however the operational risks faced by these organisations has grown substantially in recent years.
This has in part been fueled by an increase in government red tape, and also a greater awareness of legal rights among the public.
It is not just the organisation which faces these risks. Board members and senior managers can also be held personally accountable for their actions or failure to act in certain circumstances.
The occurrence of an uninsured risk could seriously jeopardise the health of your organisation, and inhibit your ability to focus on what is most important – working towards fulfilling your central mission. Having the right insurance program in place is a critical component of managing the day-to-day operational risks of a Not For Profit association.
An insurance policy that we feel all not for profit organisations should have in place is Association Liability Insurance.
What is Association Liability Insurance?
Association Liability Insurance can provide protection for the Directors and Officers’ assets as well as for the organisation itself for a range of exposures related to employment practices, fraud or fines and penalties. It also extends to protect against errors or omissions in the provision of advice and training.
Why do you need cover?
There are a number of risks associated with running a Not For Profit, not to mention the legal requirements that organisations must comply with. Penalties are now tougher than ever for organisations and their board members when regulatory infractions are committed. This can include:
- Conflict of interest
- Misuse of knowledge gained on Board
- Misuse of position on Board
- Trading while insolvent
- Complicit involvement
What does it cover?
An Association Liability policy typically covers your legal defence costs as well as the compensation and legal costs owed to a claimant in response to allegations of ‘wrongful acts’ committed by a Not For Profit organisation, and/or its management.
Association Liability is designed specifically for Not For Profit associations, and incorporates a number of cover sections which includes:
Professional Indemnity Insurance errors and omissions
This policy section will provide coverage for breach of professional responsibilities where failure results in financial loss, personal injury, or property damage to a third party. A violation of duties may include giving incorrect advice, breaching a duty of care to service users, and / or violating professionally recognised standards of conduct.
Directors and Offices Insurance
This component of Association Liability will afford coverage for management committee members, board members, and senior management by protecting them against losses incurred when they commit or have been alleged to commit wrongful acts whilst carrying out their professional duties.
Employment Practices Liability (EPL) Insurance
EPL offers protection for your directors and officers against claims and covers legal costs in cases where an employee alleges that you have acted towards them in an inappropriate manner regarding their employment. Examples may include unfair dismissal, bullying or harassment.
Fidelity insures your Not For Profit against damages caused by fraud, dishonesty, or the embezzlement of cash, cheques or property by an employee.
Tax Audit Insurance
Tax Audit cover can compensate you for the cost of appointing an accountant to respond to a Tax Audit request by the Australian Taxation Office.
Who does Association Liability protect?
Normally the association and its directors, secretaries, officers, trustees, committee members, employees, volunteers and any individual acting for the association at the direction of a board or management committee of the Association.
It is important to note however that cover will not apply in cases where illegal personal gain or advantage is acquired, or a criminal or fraudulent act is proven.
Who needs Association Liability Insurance?
- Industry Associations
- Charities and other Benevolent Societies
- Educational Institutions / Universities
- Political Associations
- Professional Associations
- Licensed Clubs
- Religious and Community Organisations
- Sporting Associations
Every Not For Profit organisation’s insurance needs are different, and will require a tailored risk solution. Based on this it is strongly recommended that professional advice is sought from an insurance broker to assist you in obtaining the right cover for your organisation.
Other policies to consider
Property and Liability Insurance
Cover against loss of, or damage to, physical assets belonging to the organisation. This incorporates consequential loss associated with any such physical damage. Coverage can be extended to protect you against third party claims for personal injury or property damage.
Cover for Volunteers whilst engaged in services on your behalf. This cover offers protection against accidental death, disablement or personal injury. It also covers your volunteers whilst travelling to and from volunteer activities.
There are unique challenges in managing both small and large commercial fleets. We have access to insurance markets for all of your motor fleet needs.
To speak with a broker about your insurance requirements, please contact our team of Not for profit insurance specialists Ph. 1300 424 627.
The information contained in this documentation should only be considered as general advice. It is not intended to take the place of personal advice. Before acting on this information you should consider the appropriateness of this advice to your particular objectives, needs and financial situation. For a full explanation of policy terms, conditions and limits you should refer to the relevant Insurer’s Product Disclosure Statement which can be obtained from our office. Cover is subject to underwriting acceptance criteria.
Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.