Liability For Volunteers

Volunteering time is one of America's most valuable assets. This includes Individuals serving as volunteer board members on non-profits, churches, clubs, PTA's and other civic organizations. The decisions these Americans make can result in a dramatic effect on their respective organization—and not always for the best. If a volunteer project goes south, would a volunteer member have coverage to protect them from a legal suit under his or her homeowner’s policy contract?

Homeowners’ Insurance

The last thing volunteers need to evaluate is what would happen if their organization files a law suit against them as a result of their volunteerism. But it can happen, especially when volunteers make decisions that have a financial impact on an organization. In many cases, the only insurance policies these volunteers have to protect themselves is a homeowner’s policy. Unfortunately, this policy contract may be of small or no assistance.

The reason homeowners’ policy contracts don't usually cover liability stemming from actions as a volunteer is the nature of the claim. This policy contract is designed to cover "bodily injury" claims, such as someone tripping on cracked pavement in your driveway; and/or “property damage,” such as accidentally setting your neighbor’s home on fire while having an outdoor barbeque.

Legal suits against board members don't usually contain bodily injury or property damage. Rather, they contain a bad judgement claim that resulted in a financial loss to the organization, such as the decision to invest in a flawed item of property that ends up costing the organization more than it had anticipated.

There is another problem. Homeowners policy contracts don't cover “professional services.” This is critical to note, because board members often serve in a capacity consistent along with their profession. For example, a church member who is an accountant may be asked to serve on the board as the finance chairman. While he is not paid for his work, the “professional services” exclusion under his homeowner’s policy contract would still be applicable.

In addition to the above, homeowners policy contracts don't cover claims of personal injury unless this coverage is specifically included. Personal injury is added to the homeowner’s policy contract to cover insurance claims such as slander, libel, wrongful eviction, and false advertising.

What to Do

Even though the reasons shown above prove it’s rare, not all claims against volunteer board members are excluded by a homeowners policy contract. Decisions to buy personal injury coverage and a personal umbrella policy contract will raise your ability to find coverage for a suit against you.

The best method for insuring the actions of board members is for the organization to buy a directors and officers (D&O) liability policy. These policy contracts are relatively inexpensive for nearly all non-profits. Before volunteering your time, request some information on the organization’s D&O policy contract. The lack of having this insurance leaves you at risk of having no personal insurance to defend yourself if a legal suit is brought against you by the organization and may have an impact on your decision to serve.