[24126] in APO-L
[APO-L] B oard liability
daemon@ATHENA.MIT.EDU (Rich Quodomine)
Wed Jan 21 12:55:53 2004
Date: Wed, 21 Jan 2004 12:55:41 -0500
Reply-To: Rich Quodomine <aposatan@hotmail.com>
From: Rich Quodomine <aposatan@hotmail.com>
To: APO-L@LISTSERV.IUPUI.EDU
*throws on his former insurance agent cap*
I had a very long discussion on this topic with one of the Albany area's top
insurance professionals (Anchor Agency, for those of you from the area).
This was back when a certain board member (name not here) asked me about
insurance when I was an insurance agent.
Here's what liability board members have:
1. Should a fraternity be sued, a board member can be jointly and separately
held liable if it is determined that there was some kind of liability on
*any* collective front. For example, if an individual sexually harasses a
pledge, and proper steps are not taken within the context of teh fraternity
to redress teh matter, there is a quid pro quo (read: tacit) allowance of
the situation to exist. A board member, as an officer, can be held liable.
2. Should the board member in question engage in criminal behavior, or allow
such to happen in violation of laws, there is also proviso for a lawsuit.
National fraternities, such as APO, are organized as corporations partly to
protect individual members' assets and to purchase special umbrella
liability insurance - often called "fraternal insurance" by members of the
industry. It is inherently a type of risk pool, and many insurers do not
carry it. However, a willful act on the part of a board member would not be
covered.
3. Any individual action determined legally to be the total or partial
responsibility of a baord member, even if that board emember had nothing to
do with the situation - such as hazing in a state or municipality which
holds fraternal national officers responsible [rare, as I am told] - could
also result in lawsuit or insurance settlement.
In order to protect members of the board, there are three major types of
insurance:
1. Umbrella liability, which is a broad type of insurance designed to settle
lawsuits for everything from 'slip and fall' on one's own property to
reckless driving accidents resulting in minor injuries. Most people buy some
liability with thier auto or home insurance.
2. Errors and Omissions - basically, this is known as "F*ck Up Insurance" in
the industry, or more civilly, E&O. If a board member were to misplace a
critical item, misrepresent the fraternity in a fiduciary or legal sense, or
similar error where the consequence was not intended but may be a civil
liability, E&O covers this, up to the value of the insurance. E&O is
commonly available at most multiline insurance brokers.
3. Directors and Officers - THis most completely plays to the Board members
of APO. D&O, as it's called, is typically $1000 a year for $1 million in
coverage, the typical limit for officers of any corporation, be it private,
public or non-profit in coverage for incidents that they do not have party
to. D&O settles claims on officers in broad or class-action lawsuits where
they are yes, an officer, but had no guilt or knowledge of illegal activity.
THis can be invalidated by knowledge of illegal activity that is ignored, or
paperwork that reveals direct compliance in any illegal or civilly liable
activity.
All of the above coverages are available at major multiline insurance
brokers, who can offer a wide variety of coverages and costs. It would be my
suggestion that officers of APO carry umbrella liability at the very least,
as a rider to their home or auto, if available. If you are more financially
blessed, teh second two insurances may be a wis purchase. Risk Management is
positive, but just about everyone in their life may find themselves involved
a lawsuit or major insurance claim or civil action. I suggest calling an
insurance agent you can trust, and perhaps consulting with APO's legal
counsel or an attorney you can trust in these matters.
-- Rich
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