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Aggregate Limit: A limit in an insurance policy stipulating the most it will pay for all covered losses sustained during a specified period of time, usually one year. Aggregate limits are commonly included in liability policies and apply per chapter location.
Bodily Injury: Injury to the body, sickness or disease sustained by a person, including death resulting from any of these at any time.
Certificate of Liability Insurance: This is a certificate issued by the insurance company detailing the particulars of the insurance coverage in place for all chapters and regions under the general liability policy. This certificate may be used to document the existence of coverages for chapters and regions. This document is not sufficient when a third-party requests a certificate where they are named as an additional insured.
Certificate of Liability Insurance for an Additional Insured: This is a certificate issued by the insurance company detailing the particulars of the insurance coverage in place for all chapters and regions under the general liability policy. This document specifically identifies a third party as being expressly covered under the general liability policy for a specified period of time (i.e. an additional insured). This form of insurance certificate is often requested by facilities where chapters or regions are planning to hold events.
Claim: An incident where the injured party is making a demand for compensation under the terms of an insurance contract.
Director’s & Officer’s Liability Insurance: Offers directors and officers protection from personal liability and financial loss arising out of wrongful acts committed or allegedly committed in their capacity as officers and/or directors.
Exposure: The measure of your vulnerability to loss.
General Liability insurance: Coverage that pertains, for the most part, to claims arising out of the insured’s liability for injuries or damage caused by ownership of or responsibility for property, sale or distribution of products, and liability for the insured’s operations.
Incident: An occurrence involving bodily injury to a member or guest that does not result in a formal claim. All incidents must be reported when discovered due to possibility of them becoming a claim.
Intentional Act: Deliberately fraudulent acts or omissions, wanton, willful, reckless or intentional disregard of any law or laws. An accident, including continuous or repeated exposure to substantially the same general, harmful conditions.
Property Damage: Physical injury to tangible property, including all resulting loss of use of that property. All such loss of use shall be deemed to occur at the time of the physical injury that caused it; or Loss of use of tangible property that is not physically injured. All such loss of use shall be deemed to occur at the time of the “occurrence” that caused it.
Underwriting: The process of selecting risks for insurance and classifying them according to their degree of insurability, so that the appropriate rates and premiums may be assigned. The process also includes rejection of those risks that do not qualify.
Have we missed a term that you would like to see explained? Contact Sara Sterley with your suggestion. Thank you!
The original “Letter to Member’s Parents” that we created for our clients as a template for their use addresses the ways in which the insurance program works in hopes of preempting risk management and insurance questions from members and their parents before those questions arise.
However, we believe that there will likely be additional questions our clients face this year with regard to the various Covid-19 policies and safety measures put in place, which likely vary from campus to campus. We have offered some additional verbiage regarding Covid-19 to our existing template. We encourage you to modify our verbiage as necessary and incorporate your own specific measures that your organization and location will be adopting.
Please feel free to use this template and edit it as you see fit. You will notice [bracketed] sections where we encourage you to insert your organization and/or chapter name to make it specific to your needs.
Re: [Sorority’s] National Insurance Program
To The Parents of [Chapter Member’s Name]:
The Independent Insurance Agents of America estimate that 100,000 property claims occur on college campuses annually. In addition, today’s students are bringing more and more expensive items to school with them than ever before. For that reason, we believe that it is our responsibility to communicate to the chapter members and their parents the specifics of the Fraternity’s insurance coverage.
Each House Corporation/Chapter has a contract with the resident members that define the relationship and obligation of both parties to the arrangement. The agreement explicitly states that the House Corporation/Chapter is not responsible for any loss or damage to a resident member’s personal property, including their personal automobiles. Similarly to any other rental arrangement, the resident is responsible for insuring their own personal property, either via their parent’s homeowners policy or via a renters’ policy. The property coverage that the organization purchases covers the Fraternity’s property, such as the furniture and kitchen equipment at the chapter house, for example.
Parent’s homeowners policy
It is the responsibility of the resident member to make sure that their personal property is protected while living in the chapter house. Many chapter members’ property would still be covered under their parent’s homeowners policy; however, we recommend that chapter members and their families verify their homeowners policy extend to cover a student’s personal property while away at college.
We have reviewed the industry-standard insurance language for homeowners policies, in hopes of providing resident members with the information necessary to ensure that their personal property is adequately protected. The standard homeowners policy language defines an insured as:
- A student in school full time, as defined by the school, who was a resident of your household before moving out to attend school, provided the student is under the age of:
- 24 and your relative; or
- 21 and in your care or the care of a person described above (there have been a number of states that have enacted legislation that extends the age limit beyond 21 years, so be sure to verify the age limit in your insurance policy language)
Most resident members would fit into one or both of the definitions above, but there are further issues to consider to ensure your personal property is protected:
- College students are typically covered for ten percent of the contents limit under their parent’s homeowners policy. If your personal property is valued at or above the ten percent limit under your policy, you should speak with your insurance agent about increasing that limit.
- Under the standard homeowners policy, the contents coverage only provides named perils coverage, which means that losses would be covered only if they arise from causes of loss listed in the policy. A laptop that was damaged from power surge or from being dropped, for example, would likely not be covered under a named perils policy. We recommend that you verify with your insurance agent that the policy provides all-risk coverage.
- If a student chooses to declare independent status, perhaps for loan purposes, they would likely not be covered under their parent’s homeowners policy.
If you would prefer not to rely on your homeowners insurance or you do not have access to homeowners insurance for whatever reason, we highly encourage you or your daughter to purchase renter’s insurance, which will cover her personal property and is very affordable. For example, National Student Services, Inc. <http://www.nssi.com>, the nationwide leader in college student property insurance, offers $10,000 worth of coverage with a $50 deductible for about $250 in annual premium. If you or your daughter purchases a renter’s policy, we recommend that you confirm that the following perils are covered: theft, fire, flood, and wind. In addition, some of the most common causes of loss to a laptop include drops and damage from liquids being spilled into the laptop, so it is important to verify whether or not those types of claims would be covered.
Your daughter’s organization has purchased the broadest coverage possible to protect your daughter should she be named in a lawsuit due to her affiliation with [sorority name], so long as she is following the guidelines of the organization. The liability insurance is third-party coverage, meaning that it protects the insureds (the Sorority/Fraternity, House Corporation, Chapter, Members, Volunteers, etc.) should they be named in a lawsuit from a third-party.
The organization’s liability insurance does not cover personal injury to your daughter, in much the same way that your homeowners policy does not provide medical coverage for members of your household. If you daughter is injured at the chapter house or at a chapter event, she will need to rely on her (or your) personal medical policy. This is also spelled out in the membership and housing agreements that she has signed.
If your daughter takes her car to school, your automobile policy will continue to cover her personal automobile while she is away at school. If she does not take a car with her to school, you will want to ensure that she is still listed as a driver under your automobile policy, if she plans to drive any automobile while away at school. Several insurance companies offer “student away at school” discounts for this types of coverage, so be sure to check with your insurance agent before she leaves for college.
If your daughter drives her personal automobile on sorority business and is involved in an accident, she will not be covered by [sorority’s name] automobile liability policy. The organization’s automobile liability policy exists to protect the organization if it is named in a lawsuit involving an automobile, not individuals. For more information about the automobile coverage, please refer to the Digging Deeper: Non-Owned Automobile document on MJ’s website.
For many chapter members, college is the first opportunity for them to live on their own away from home. It is important that chapter members and their families take the necessary steps to ensure that their personal property, which can often be very expensive, is financially protected via insurance. If you are interested in studying the organization’s insurance program further, we recommend you review the expansive Insurance Summary on MJ’s website. We realize that this can be a confusing issue, so please do not hesitate to contact us with any questions or concerns.
Certainly, every family is reviewing what the future academic year will look like for their daughter both from the university and sorority membership standpoint. We can only imagine how difficult it has been navigating these complex decisions.
There is no debate that all students on campus will be expected to follow the new rules that universities and fraternal organizations put in place to ensure the health and safety of the students, faculty, and community. It also goes without saying that the sorority officers of the chapter will have more responsibility to help lead this effort. With increased responsibilities comes greater liability to act as a “reasonable and prudent person” would do in a similar situation.
We acknowledge your concern over your daughter taking a leadership role in her sorority and would offer that the other risks on a college campus of underage drinking, sexual harassment and assault, hazing, and general social behavior of its members is equal to, if not more problematic, than potential liability due to an individual becoming infected with the virus.
There will be some elements that we believe will minimize this exposure. such as difficulty in contact tracking/tracing and the extra measures that the sorority chapter operations and the chapter property management has put in place to ensure a clean and safe property.
If your daughter is a chapter officer, she has been, pre-Covid-19 and now, covered as an additional insured to the [Sorority’s] national insurance policy, and we remain confident that your daughter would see her organization’s policy step up to defend her should she be named in a lawsuit and pay for a judgement should she be found negligible in her duties as an officer. You can be confident in the comprehensive national insurance policy that your daughter’s organization has secured for their exposures to risk.
Director of Risk Management Education
Other helpful resources:
- Insurance Basics for Member’s Parents Webinar: We have created a self-guided presentation that explains how the organization’s insurance program works, as well as provides some helpful hints regarding homeowners or renter’s insurance coverage.
- Insurance Summary: An expansive explanation of the organization’s insurance program in straightforward and accessible language.
- www.mjsorority.com: A one-stop resource for all things related to risk management and insurance issues from the leader in women’s fraternity and sorority risk management needs. For our numerous Covid-19 resources, please check out our expansive Covid-19 Response Resource Center.
We often receive phone calls and emails from new volunteers asking whether or not their organization carries Directors and Officers (D&O) coverage. First, yes, your organization carries D&O coverage to protect you as an officer of the Fraternity/Sorority. However, we wanted to take the opportunity to explain some common misconceptions regarding D&O coverage.
D&O coverage provides errors and omissions coverage to protect individuals who serve on boards of an organization and is commonly referred to as wrongful acts coverage for an organization’s directors and officers. For example, a D&O claim would arise if a third-party alleged that they didn’t approve of the money the house corporation spent on a recent renovation project. Since January of 2005, the Sorority Book of Business (the totality of our women’s fraternity/sorority clients) has had thirteen D&O claims in which the insurance company has paid indemnity or defense costs. In the last several years, we have seen an uptick in the number of D&O claims. Breach of contract and wrongful termination (typically membership) appear to be the leading allegations in those claims.
Conversely, we see the greatest exposure for our clients’ volunteers as the exposure to being named in a liability lawsuit. For these reasons, it is important to verify with any organization on whose behalf you are volunteering your time and talents that the organization carries adequate liability limits that protect the organization’s volunteers in the event of a claim. Fortunately for the volunteers of our clients, your organization has already ensured that their volunteers are protected from a liability standpoint whenever they are acting on the behalf of and in the best interests of the Fraternity/Sorority.
Refer to your Insurance Overview to verify your organization’s specific liability and umbrella limits. While acting in the capacity as a volunteer for the Fraternity/Sorority, it is important to make certain you are following your organization’s policies and guidelines in order to guarantee protection under the insurance program. As a volunteer for your fraternity/sorority or other volunteer positions that you likely hold, it is important that you arm yourself with as much information as possible about the liability associated with your position with the organizations you serve.
Non-Owned Automobile Liability is the most commonly misunderstood coverage in the Sorority Book of Business. Non-Owned Automobile Liability is designed to protect the organization for the risk of being named in a lawsuit involving an automobile. It does not protect individuals who are driving on behalf of the Sorority/Fraternity.
Non-Owned and Hired automobiles are automatically covered under the organization’s Automobile Liability policy and are defined as follows:
Hired Autos: Autos you lease, hire, rent or borrow; except autos from your employees and members (for example, vehicles you rent from Avis, Hertz, etc.). When you are renting an automobile on behalf of the organization, there is no need for you to purchase the physical damage coverage for the automobile from the rental car company. Hired Automobile Physical Damage coverage is provided subject to the policy deductibles.
Non-owned Autos: Autos you do not own, lease, hire, rent or borrow that are used in connection with your organization. This includes autos owned by your employees and members but only while used in your organization. Provides coverage for sums you legally must pay as damages because of bodily injury or property damage caused by an accident and resulting from the use of a covered auto.
It is important to note that the Hired Automobile Physical Damage coverage extends to direct damage or theft of a rented automobile and operates for the benefit of the insured, which is the fraternity/sorority. Automobile rental agreements, therefore, should always be executed in the name of the fraternity/sorority, rather than an individual’s name.
Any Named Insured using a non-owned or hired auto is an insured, except:
- The owner or anyone else from whom you hire or borrow a covered auto.
- Your employee – if the covered auto is owned by that employee or a member of his/her household.
Non-Owned Automobile Liability coverage does not provide coverage for someone who is driving their personal automobile to or from Sorority/Fraternity events. This coverage is designed only to protect the organization, not the volunteer, member, officer, etc. who is driving their own vehicle on the organization’s behalf. Any volunteers, members, officers, etc. who choose to drive their personal automobiles on behalf of the organization need to rely on their own personal automobile coverage in case of an accident.
Individuals who use their own vehicles to drive to/from a sorority event must look to their own automobile insurance for protection should they be involved in an automobile accident.
The exposures associated with the Non-Owned Automobile Liability coverage are particularly concerning from a risk management perspective because of the vast number of personal automobiles that are driven to and from Sorority/Fraternity events at any given time that expose the organization to a Non-Owned Automobile Liability claim.
Further exacerbating the sheer exposure issue with non-owned autos is the number of members, volunteers and third-party individuals who only carry the state minimum automobile liability limits, which are woefully inadequate for accidents involving even minor injuries. For their own protection and fiduciary stability, we recommend that all volunteers and members of your organization carry at least a combined single limit of $300,000. Higher automobile liability limits are marginally more expensive than the state minimum limits, and the higher the limit, the less likely you are to suffer long-term financially consequences to an automobile accident.
Even in situations in which the organization was not negligent in causing the accident, plaintiff attorney’s often use the “deep pocket” mentality when it comes to automobile accidents involving even minor injuries, meaning that the Sorority/Fraternity is seen as the “deep pocket” in the situation. Accordingly, in many of the examples listed below, the organization was brought into the lawsuit because they were seen as having more money and/or higher insurance limits to pay for the cost of lengthy litigation and judgment.
Over the last ten years, under the MJ Sorority Book of Business, the insurance company has paid out over $3.7M in automobile-related claims on behalf of our clients. With the potential for one accident (see examples below) to wipe out ten or more year’s worth of an organization’s Non-Owned Automobile Liability premium, the non-owned automobile exposure is quite disturbing.
Clearly the Non-Owned Automobile Liability exposure is an uncontrollable one, which is what makes it so concerning for our clients. The most important risk management tool in attempting to limit your Non-Owned Automobile Liability exposure is to encourage your members and volunteers to have a minimum combined single personal automobile liability limit of $300,000. In addition, we do not support designated driver programs that are not held in conjunction with an official sorority event (see this position paper on our website for more information). Finally, it is important that the chapter and sorority/fraternity leadership educate their members and volunteers as to how this coverage operates, so that they are aware of the exposure to their personal insurance coverage when they drive to/from any sorority/fraternity event or activity.
The following claim examples are real-life examples of how the Non-Owned/Hired Automobile Liability coverage responds when an incident occurs:
Several chapter members were driving to a regional conference together in a member’s personal automobile. The vehicle swerved off the interstate in a single-vehicle accident, and one of the chapter member occupants was killed and another chapter member occupant was severely injured. The families of the killed and injured chapter members sued the driver and the Sorority for damages. The driver of the vehicle only carried the state minimum insurance limit of $25,000, which were quickly exhausted. The organization’s insurance policy settled with both families for a total of $740,000. The sorority was brought into this lawsuit because the driver’s limits were so low and the families of both women felt that someone (i.e. the Sorority) should pay for their loss. In addition, the Sorority’s policies stated that sisters driving vehicles in “official sorority capacity” were doing so as agents of the Sorority, which further hurt the Sorority’s defense.
An officer was involved in an automobile accident in a rental car while attending a Leadership Conference. The officer failed to yield the right-of-way in traffic and struck another vehicle, injuring the two passengers in the other vehicle. The insurance company, on behalf of the organization, paid out $252,000 in settlement to the claimant and defense costs and $13,000 in property damages to the rental car company. The insurance company, on behalf of the organization, settled this claim because the officer was driving a rental car, and all cars rented for sorority purposes are covered under the insurance policy.
A chapter advisor was driving a few members to the chapter house after a philanthropic event in her personal automobile. She ran a red light and severely injured two people riding on a motorcycle. The advisor’s personal automobile insurance limit was only $100,000, which was exhausted immediately. The total cost of the claim was $2,385,000. The insurance company settled this claim on behalf of the organization because of the deep pocket theory. In addition, the insurance company was unwilling to take the claim to court and risk the jury ruling in favor of two young people with severe injuries