This guide from Travelers, the insurance company for MJ Sorority clients, provides information on incorporating best practices and a prevention plan to help reduce the risks of slips, trips and falls at your business and on your premises.
This guide from Travelers, the insurance company for MJ Sorority clients, provides information for property owners on liability regarding sidewalks.
We have received several questions from our clients regarding coverage for an individual on staff serving as in-house counsel. I have approached this question from two different angles:
- Individual serving as an employee
- Individual serving as an independent contractor
The first issue to resolve is whether either status of “individual” is covered by the insurance policy. To that end, the following statements describe how individuals are covered under the General Liability, Umbrella and Excess Umbrella policies:
- Employees are covered, but only for acts within the scope of their employment by you or while performing duties related to the conduct of your business.
- Volunteers are covered, but if they are compensated in some way they do not qualify as insureds.
- Coverage applies to a “leased worker,” which is defined as a person leased to you by a labor leasing firm under an agreement.
- Coverage does not apply to an independent contractor.
Secondly, there is no exclusion for professional services under the Bodily Injury, Property Damage and Personal Injury provisions of the policies. Thus, the current policies would provide coverage for liability allegations if the individual is an employee or leased worker of your organization.
We have to look separately at the Directors and Officers and Employment Practices Liability policies. These policies contain the following provisions:
- Employees are defined as insureds under the policy.
- There is no exclusion for professional services in the coverage language.
We are confident that any employee while acting within the scope of his/her duties would be covered under all of the insurance policies that are secured by the organization. Should the status of the individual be something other than an employee, that situation is less conclusive. Should you have further questions or concerns, please do not hesitate to contact us.
The sorority/fraternity (“sorority”) exposures are vast in scope and challenging for an insurance company to underwrite and ultimately “accept” the risk in writing the coverage. The insurance coverage is designed to protect and defend the “sorority” and its collegiate and alumnae members from any allegations by someone else, a third-party, of damage or injury. Subsequently the coverage is not designed to be a first-party coverage whereby a member sues another member or the organization for damage or bodily injury.
This very distinction becomes the central point in the requirement that the insurance company has established with the residency in a chapter house.
One of the basic tenants is that only collegiate members of the organization are permitted to be residents of a chapter house. The presumption then is that as members you are obligated to follow the rules and guidelines of the “sorority” and in the absence of which, you run the risk of membership termination and eviction from the chapter housing.
If you are not a member, the “sorority” has very little recourse to draw upon should the non-member engage in behavior that does not mesh with the “sorority’s” rules. Subsequently, the landlord and/or the “sorority” chapter are forced to rely on local “tenancy” laws which are generally not a cost effective solution for eviction. There are numerous “sorority specific” reasons also that make the non-member resident cumbersome and a distraction to the chapter.
Therefore, we recommend that our clients do not entertain the allowance of non-members as residents of a “sorority” chapter house.
We fairly regularly receive questions from members and alumnae regarding the use of individual’s personal homes for chapter events. From a risk management standpoint, we have a few different opinions based on the type of event being held. However, regardless of the type of event being held (whether it be a philanthropic fundraising event, an alumnae chapter meeting, or a recruitment event), the important thing to remember is that the homeowner would be responsible for any bodily injury or property damage that might occur from the actions or inactions of an attendee at the function. The homeowner, by hosting the event in their home, takes responsibility for any injury or damage that occurs during the event. Presumably, their homeowner’s policy would serve as the appropriate way to handle the incident.
We highly recommend that the event organizers advise the homeowner of this information prior to the event, so the proper expectations have been set beforehand. Obviously, this might convince some volunteers to rescind the use of their home, but this alternative is far better than having them upset when we decline a claim that developed out of their event in their home.
If the homeowner would not wish to be exposed in this liability but still would like to hold the event in their home, we encourage them to draft a contract between the homeowner and the chapter, in which the organization agrees to add this homeowner on as an additional insured and, therefore, receive coverage under the national liability policy. This type of arrangement must be approved by the Fraternity/Sorority Headquarters.
If a function is planned at an individual’s home that rises to the level of a significant event with many attendees, such as a fundraiser, we would highly recommend that there be a specific contract in place between the group and the owner of the home listing the terms and responsibilities of each party to the contract, such as provisions that clarify which party is responsible for any bodily injury or property damage that comes from the event. If you are contemplating this type of event, please contact us as early in the planning process as possible, so that we can address the necessary insurance verbiage and requirements upfront. If we deem that the exposure is outside of the normal level of risk, the insurance company may require some additional premium.
The other potential exposure that must be properly addressed is the matter of catering and the serving of alcohol at these events. In these cases, both the organization and the homeowner would need to take the appropriate measures to ensure that both the caterer and who ever serves the alcohol has their own insurance coverage in place to cover their actions.
Should you have any questions or concerns, please do not hesitate to contact us.
There are many points on which the legal profession and the insurance profession disagree; the definitions of personal injury and bodily injury are two. The insurance profession rightly assigns these terms two separate meanings while the legal profession lumps all injuries into one definition – “Personal Injury.”
Legal dictionaries define “personal injury” to mean an injury to a person’s body, mind or emotions. Included within this definition are injuries resulting from negligence or intentional acts. The term is often inappropriately used in contracts such as leases and subcontract agreements relating to insurance requirements, terms and conditions. Such use can cause confusion as the unknowing lawyer draws up the contract intending one type of coverage when the insurance professional reads this as a different breadth of coverage.
- Personal injury does not equal bodily injury; lawyers not aware of such differences can create confusion and discourse.
- Bodily Injury from an insurance standpoint means bodily harm, sickness or disease sustained by a person, including death resulting from any of these at any time. Mental anguish and loss of service is, at times, included as part of this definition.
- Personal Injury (coupled with “Advertising Injury” in the commercial general liability policy) usually describes intentional torts such as libel, slander, defamation of character, false arrest, wrongful entry into, wrongful eviction from, malicious prosecution and other such actions.
Liquor Liability: What is it and what does it matter?
Liquor Liability Coverage is designed to protect a seller/provider of alcohol, such as a restaurant or a bar, from the financial consequences of their legal liability when a patron or a third-party is injured as a result of the negligent serving of the alcohol or negligence in not preventing an individual from injuring a third-party.
The legal liability comes from each state enacting legislation, which defends the extent to which a provider is liable in that state. The definition of legal liability varies by state because each state applies its own codified and judicially interpreted laws to the businesses in that state.
These laws have evolved over the years since their inception in the mid-nineteenth century in the United States. Originally there were no laws that would impose any responsibility upon sellers/providers of alcohol for the consequences of the consumption of beverages under the theory that the person consuming the alcohol bore the primary responsibility.
Over time there were many influences to the emergence of liquor liability legislation, which attempts to place some liability upon the business serving the alcohol. In recent times, public concern over problems associated with drunk driving became a major factor in increasing the liability of alcohol providers and social hosts for the dispensing of alcoholic beverages, the most notable influence being Mothers Against Drunk Driving (MADD).
These laws are often times referred to as “dram shop” laws. The term “dram” dates back to eighteenth century England where businesses sold gin by the spoonful called a dram.
The legal liability or tort laws passed in each state do vary; however, there are two basic tenets:
- Give persons a civil right of action against providers of alcoholic beverages when they are injured or their property damaged through the actions of an intoxicated adult and/or a minor.
- Existence of a law generally imposes higher liability against a provider of alcoholic beverages.
Each state’s legal liability laws are unique, and the elements of each provide the extent to the degree of liability placed on the establishment serving the alcohol.
- In some states, every establishment in which the intoxicated person drank can be pulled into the lawsuit; the establishment then has to prove that the person was not or did not appear intoxicated while there. Each establishment in these states can be held liable.
- At least one state holds the establishment liable if the patron appears intoxicated even if they came into the establishment that way and did not drink while they were there.
- Other states require proof that the establishment sold alcohol to the intoxicated individual, injuries were sustained and the intoxication was the proximate cause of the injury (ies).
There are a few states that have not established legal or tort law defining the provider’s liability should an injury or property damage occur by one of its patrons consuming alcohol. Therefore, many courts have modified the rule of non-liability (no tort law) based on new “standards of care” imposed by modern negligence principles or regulatory statutes. The states will either recognize tort law, common law principle or both in the course of legal liability of a provider of alcohol.
Regardless of what state a provider is operating in, there will be some type of liability imposed by the courts for the serving of alcohol. This responsibility is ultimately insured under what is referred to as a Liquor Liability Policy, which is separate from their General Liability or Business Liability Policy. The premium charges that the insurance company makes for the exposure of serving alcohol is state-specific and takes into consideration that particular state’s laws on liability for providers of alcoholic beverages.
Good risk management should be used in determining the providers that you wish to use for your functions. As such, you should only engage an establishment that has comprehensive and adequate liability insurance, including liquor liability when the function includes the serving of alcoholic beverages.
We have run into a procedure that some of our clients have implemented that we believe has unintentionally created some confusion, which we would like to draw to your attention. The procedure is that when a chapter rents a venue for a function and the venue is serving alcohol, the chapter is required to check for the liquor license and occasionally are being asked to secure a copy of the liquor license.
The confusion arises with the risk management recommendation that the venue have both General Liability coverage as well as Liquor Liability coverage. What happens has been that once this chapter secures a copy of the liquor license, they think they have also satisfied the requirement of the Liquor Liability coverage.
Not only does it cause confusion, but we believe that the requirement of getting a copy of this liquor license is unnecessary for two reasons:
- Liquor distribution and the serving of alcohol are highly regulated. We are of the opinion that the governmental agency responsible for monitoring the licensing and the distribution business provides sufficient confidence to a patron that the proper licensing has taken place.
- Insurance companies providing Liquor Liability coverage require evidence of a valid liquor license so by requiring Liquor Liability insurance, you have effectively also validated that the venue has a valid license.
There is no debate on the fact that the venue having the Liquor Liability coverage is critical. The entity serving the alcohol should be primarily liable for the claims that arise out of this service. The insurance coverage under your national insurance policy would apply regardless of whether the venue has the necessary license or not.
Should you have any additional questions or concerns, please do not hesitate to contact us.
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.
The one word that most aptly applies to a woman’s fraternity or sorority is the word “sisterhood,” defined loosely as collegiate women watching out for each other. It is this very value that has brought about the well-intentioned chapter programs referred to under a variety of titles, the most common being designated driver or “sober sis” programs.
Mother’s Against Drunk Driving (MADD) has encouraged better decision-making by individuals when drinking and driving. Collegiate young adults are typically less experienced drivers, and, statistically, this age group has a crash rate per mile that is four times higher than all other drivers according to the Institute for Highway Safety. As a result, we are seeing more and more interest in finding ways to keep young adults safe.
Many of our clients chapters have designated driver or “sober sis” programs, in which certain chapter members sign up to serve as designated drivers for other chapter members in hopes of providing safe transportation to and from the chapter house for those members who may be intoxicated. These types of programs are obviously very well-intentioned; however, from a risk management perspective, they surprisingly do more harm than good to the Sorority/Fraternity for some of the following reasons:
- Designated driver programs that are organized and mandated by the chapter lead participants and other observers to assume that the chapter is ensuring the safety of the driver and the passengers. In actuality, the chapter does not have the capacity or expertise to ensure the safety of the participants. By organizing these types of programs, the chapter is welcoming any claims that may arise due to the designated driver program. On the contrary, friends (chapter members or not) who agree to pick one another up after an evening of alcohol consumption are simply helping a friend; when this practice becomes a chapter activity (advertised at chapter meetings, on Facebook, etc.) is when the liability for the chapter and Sorority/Fraternity become a concern.
- Designated driver programs put the driver at undue risk for possible claims. Even the best drivers have accidents. If a chapter’s designated driver gets in an accident and people or property are damaged, the driver’s insurance will be the first to respond.
- Designated driver programs typically do not screen the driver volunteers in order to ensure that the safest possible drivers are participating in the activity. A complete screening process would include gathering the following information, at the minimum:
- The driver’s motor vehicle record, which includes information on their accident and driving history
- Proof of the driver/vehicle’s insurance (with adequate limits)
- The ability of the driver to handle the distractions associated with driving several passengers all evening
- The willingness of the driver to remain sober on her designated evenings
- The safety record of the automobiles being used by the designated drivers. A screening process for each chapter’s potential designated drivers would be difficult and timely to organize, and, even if a screening process does exist, it does not prevent all accidents.
- Frequently, the designated drivers tend to be the younger women of the chapter because they are not yet legally able to consume alcohol. To an outsider, this practice of the older members calling the younger members to pick them up from a bar or party tends to look like hazing, which puts the chapter and Sorority/Fraternity at increased liability in the event of a claim.
As a department, our position is this: we can only support designated driver programs when they are associated with an official event. In other words, from an insurance perspective, requiring various chapter members to take weekend evenings to stay sober and pick up other chapter members from the bars, parties, etc., is a no-no.
The following is a claim example that helps to give real-life substantiation for our position:
Background: The Lambda chapter of Zeta Pi Sorority had a “sober sis” program in which the chapter members would rotate the responsibility of staying sober for a few weekends a semester so that other chapter members would be guaranteed a designated driver on those evenings when they might need a safe ride home.
Scenario: Bridget Jones, Lambda Chapter Member, and several of her friends went out to the local bars for the evening. Because they had been drinking, Bridget called Lambda’s “sober sis” for the evening to come pick up her and her friends and return them safely to the chapter house. Laura Smith was the designated “sober sis” for that particular weekend, so she left for the bars to pick up Bridget and her friends soon after Bridget called. On their way home, Laura came to an intersection with a flashing red light. Believing that the intersection was a four-way intersection, Laura proceeded through the intersection after stopping. The intersection was actually only a two-way intersection with a flashing red light for one direction and a flashing yellow light for the other direction. The vehicle that was coming from the other direction did not stop because he had the flashing yellow light. Subsequently, Laura’s vehicle was struck by the vehicle coming from the opposite direction. Bridget suffered injuries to her upper body and face, none of which were life threatening.
Result: Bridget’s attorneys estimated her current medical costs at $250,000, and Bridget sued the following individuals and entities for over $800,000:
- Zeta Pi Sorority: the insurance company settled on the Sorority’s behalf with the plaintiff for $100,000
- Bob and Linda Smith, Laura’s parents: settled with the plaintiff in excess of $550,000
*The events described in this case study are based on actual events; however, the names, dates, and several other details have been changed for confidentiality purposes.
We have seen an increase in the number of requests from the collegiate chapters to participate in the concession area for an athletic event at the sports stadiums.The requests generally come about because the company managing the concessions wants the group to show evidence of insurance; thus a request to us for a Certificate of Insurance. From an underwriting standpoint, we have some concerns about this exposure and will work with each request to minimize the ultimate liability to your organization. Below are some specific guidelines:
- We will not support adding the concession management firm to your policy as an Additional Insured, if the chapter members will be serving alcohol.
- We will not support the request if the chapter members will be serving alcohol for the concession management firm.
- We will support adding the concession management firm to your policy as an Additional Insured if it meets all other qualifications.
- We will produce a Certificate of Insurance to the firm wanting to see the evidence of insurance if the event meets the above guidelines.
Fortunately we are finding that the concession management firms will work with the participating chapter and will enlist their assistance for areas other than the alcohol sales of an event.
We bring this to your attention not only to point out a trend of increased requests, but also to inform you of several recent lawsuits, which supports our underwriting position on this fundraising activity.
If the person selling the alcohol was an employee of the beverage provider, then the litigation trail and liability stops there. However, if the individual who dispersed the alcohol was involved in an organization like a sorority, then there exists a very strong probability that that organization would be brought in to the lawsuit (see here and here for examples). Hence, our fear about the ultimate liability of not only the local chapter, but also the national organization would be at risk.
We encourage you to communicate these risk management guidelines within your organization to ensure that each activity being considered is addressing the many different risk exposures.
Should you have any questions or concerns on the above information, feel free to contact your Client Executive.
One of the more challenging exposures of writing a women’s fraternity or sorority is keeping the insurance and risk management recommendations “contemporary” to the changing dynamics of a campus women’s organization. As the size of the chapter increase in membership numbers, more and more sorority sisters are gravitating to alternate housing where several of them may live together. On those campuses where sorority chapter houses are not as common and/or a sorority does not physically have a chapter house, it has been common for some of the sorority sisters to secure housing together.
Irrespective of the reason, the number of “living arrangements” outside of a traditional chapter house is increasing and are being referred to and/or being considered by the campus community as the “X Sorority” chapter house. We refer to these locations as unofficial houses.
These unofficial houses pose a number of problems to the national organizations and, ultimately, to the insurance
coverage. The concerns include the following:
- Unofficial houses are not owned by the women’s fraternity/sorority and are typically less safe
- Residents do not believe that the rules of the organization extend to the housing arrangement, as they would argue that the situation is just a few sorority sisters securing housing on their own
- In the absence of having an actual chapter house and with the majority of the residents being affiliated with one specific sorority, it is not too big of a leap of logic for the campus to construe this residence as the legitimate sorority chapter house
We have seen a significant increase in claims that are coming from those locations that are not the actual chapter house, but instead from these unofficial houses. We have identified this concern to your national leadership. We also know that, as a volunteer, you are more apt to be aware of the existence of these types of housing arrangements. Should you have one of these types of arrangements on your campus, we would ask that you bring it to the attention of your leadership. Upon their review, we have encouraged them to involve us, if needed, in addressing the housing situation specifically.
Here’s the scenario: a Chapter Advisor calls us and explains that several chapter members have come to her concerned about a fellow chapter member who is exhibiting signs of a severe eating disorder. The Chapter Advisor asks us what to do to avoid any allegations of infringing on the chapter member’s privacy. We receive calls similar in nature to the fictionalized scenario above at least once a week. The individual calling typically sites concerns of violating the Family Educational Rights & Privacy Act (FERPA), a federal law that protects the privacy of student education records. Although the legislation originally passed in 1974, FERPA has received increased attention more recently following the tragic events at Virginia Tech and the shootings in Arizona. There are a few key facts about FERPA that are especially important for our clients’ leaders and volunteers to keep in mind:
- FERPA applies to educational agencies and institutions that receive funding under any program administered by the U.S. Department of Education. Women’s fraternities and sororities are not subject to FERPA guidelines.
- FERPA generally prohibits the improper disclosure of personally identifiable information derived from education records (which are defined as those records that contain information directly related to a student and which are maintained by an educational agency or institution). However, information that an individual observes or hears about orally from others is not protected under FERPA.
- FERPA does not prohibit institutions from disclosing information under the following circumstances:
- If the student is under 21, the institution may inform the students’ parents of any violations of its alcohol or drug policies.
- If the institution believes that there is a health or safety emergency involving the student, the institution may contact the student’s parents and seek their assistance, regardless of the student’s age.
- If either parent claims the student as a federal tax dependent, the institution may disclose information it has regarding the student to both parents, regardless of the student’s age and whether there is an emergency.
We encourage you to familiarize yourself with your organization’s risk management policies and procedures when a member’s health is at risk. The leaders of your organizations have gone to great lengths to equip you with the resources and tools to know how to handle these types of situations. In emergency situations, we also encourage you to contact the appropriate University officials. Most campuses have trained individuals on staff that deal with emergency situations day-in and day-out.