Managing a Not-For-Profit organisation carries with it a significant element of liability risk to individuals. Board members and senior managers can be held personally liable for their actions or failure to act in certain circumstances.
As a Not-For-Profit organisation, Association Liability is an insurance policy you cannot overlook. Below, Yash one of our Not-For-Profit Insurance specialists, covers off some FAQs to help you wrap your head around this important insurance policy.
What does Association Liability cover?
Association Liability Insurance provides protection for the organisation as well as its Directors and Officers from a range of exposures relating to employment practices, fraud or fines and penalties. It also extends to protect against errors and omissions claims that may occur in the provision of advice and training.
How can a Director of an association be at risk?
Under the Associations Act 2009 there are increased legal requirements and tougher penalties for Directors and Officers who breach their legal duties.
Examples of a breach may include:
- Conflict of interest
- Misuse of knowledge gained on the Board
- Misuse of position on the Board
- Trading while insolvent
- Complicit involvement
An Association Liability policy will typically cover your legal defence costs, as well as the compensation and legal costs incurred in response to allegations of ‘wrongful acts’ committed by a Not for Profit organisation, and/or its management.
What’s the difference between an Association Liability policy and a Management Liability policy?
An Association Liability policy is a packaged policy designed to meet the very specific needs of Not for Profit Associations, whereas a Management Liability policy is designed to meet the needs of a Pty Ltd company. Under an Association Liability policy the package will generally include Professional Indemnity cover, whereas a Management Liability policy will not.
Does an Association Liability policy provide cover if a member steals any of our fundraising?
Yes, under the Fidelity or Crime section of the policy it will provide cover subject to the excess applicable on the policy. This section will cover the organisation against loss of money, securities or inventory resulting from fraudulent or dishonest acts committed by their employees or volunteers.
If a volunteer files a suit against the Association claiming he was bullied would the Association and Directors be covered?
Yes, under the Employment Practices section of the cover. However, it is important to ensure the policy defines volunteers as employees within its terms and conditions.
What types of organisations need 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
- Unions
If you are interested in finding out more about a suitable insurance solution for your Not-for-Profit Organisation, click here. Alternatively, contact our team of specialists to discuss how we can create an insurance and risk solution that aligns perfectly with the needs and vision of your Not-for-Profit organisation:
P | 1300 424 627
E | info@whitbread.com.au
This article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice. 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.
