Use the Chapter House Self-Inspection checklist to review your property and life-safety risk management.

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Scenario

A member attended a party at an “unofficial” chapter house.  The “unofficial” chapter house was actually an apartment, in which four chapter members lived together.  The apartment came to be known on campus as your organization’s chapter house.  The member was very intoxicated, and some other chapter members arranged for a fraternity chapter member to drive her home.  The fraternity chapter member accidentally ran over her as he was backing out of her driveway. 

In the discovery process of the claim, it was revealed that a traveling consultant from the national organization had visited with this specific chapter the week before.  The plaintiff’s attorney found evidence that the traveling consultant had participated in drinking games with the chapter members.

The insurance company settled the claim on behalf of the plaintiff for just under $1M.

Issues to discuss

  • Do you have locations that are not official chapter houses that might appear to be chapter houses? If so, what can you do to minimize “unofficial” chapter houses from appearing as chapter houses on your campus?
  • How does the traveling consultant’s actions and behavior contribute to the negligence and liability of the sorority?
  • What risk management policies should have been in place to minimize the likelihood of a claim like this happening again?

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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.

[See attached article from Fraternal Law for additional information]

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Scenario

Members of a sorority loaned their house to a men’s fraternity for a party. The men’s fraternity house was being painted, and they were unable to have a party at their own house. The sorority members did attend the party, but did not provide the alcohol. An underage member of the men’s fraternity was leaving the house when he fell down the front steps, which resulted in him losing his vision in one eye. The young man was intoxicated when he fell.

A lawsuit was filed in the matter against the fraternity and sorority, as well as some of their members. The allegations against the sorority included allegations of failure to supervise their patrons which resulted in the plaintiff being served alcoholic beverages until he was visibly intoxicated. Allegations against the sorority members included failure to supervise and control the fraternity members.

Result

The lawsuit settled for $190,000. The insurance carrier for the sorority paid $154,500. The remaining amount was paid by the member’s personal homeowner’s policy. We do know that the men’s fraternity contributed towards the settlement. However, we do not know the settlement amount.

The defense costs for this claim totaled $329,223. This was a very expensive claim to defend due to individual members being named and additional coverage investigations into whether or not the members were acting on behalf of the sorority.

Issues to discuss

  1. When loaning or leasing the property to other individuals/organizations, we recommend that you refer to MJ’s Position Paper on the topic and contact your Client Executive to discuss further.
  2. How do your policies address social events at the chapter property? What policies were broken in the above described claim? What policies would have prevented this claim from happening?
  3. What are some potential risks of renting the chapter property out to a third-party?
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Scenario

A member of a sorority was injured while climbing onto the sorority’s homecoming float. The member was walking along side the float along with fourteen other members.  The float was towards the back of the parade and was starting to fall behind. The walkers were instructed to board the float to speed up the procession. It is our understanding that a police officer may have been the one who told the women to board the float. While the member was boarding the float, the driver accelerated. The member’s foot became entangled in the wheel where her body became locked in the axle of the trailer. It is alleged that the member was drug for 110 feet. The member suffered severe and permanent injuries due to the accident. The member’s medical bills are in excess of $300,000.

A lawsuit was filed naming the University, the City, the driver of the float and the Sorority. An investigation is ongoing.  The young man who drove and owned the truck and the trailer in which the float was built on has liability limits of $100,000. There was not a contract in place with the driver of the truck. The current reserve is $400,000. This reserve may change as additional facts are discovered.

Issues to discuss

  1. How do your policies address events such as the one described above? What policies were broken in the above described claim? What policies would have prevented this claim from happening?
  2. What additional risk management policies should have been in place to minimize the likelihood of a claim like this happening again?
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Scenario

A member was injured at a chapter event when she stepped on a piece of glass that was on the dance floor and sustained a laceration to her foot. There was a sign posted at the bar stating that no glass bottles were to be taken onto the dance floor. It was discovered that the chapter did not have a chaperone at the event even though their manual stated that a chaperone should be present at all events. It was argued that had the chapter followed its own policy and had a chaperone at the event, the chaperone would have been there to enforce the rule of no glass bottles on the dance floor.

Result

While there were other factors involved, the argument regarding the chapter not following their policy factored into the decision, and the insurance company settled the claim on the organization’s behalf for $187,500.

Issues to discuss

  1. What are your policies regarding chaperones?
  2. Are your policies reviewed on a regular basis to make sure they are up to date?
  3. When policies are not followed, they can be used against you.
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Scenario

The chapter hired two buses to take their members and guests to and from an event. One bus had security, but the senior bus did not. On the senior bus, a fight broke out between two members’ boyfriends. One of the young men sustained a broken nose, as well as other facial fractures during the fight. It was confirmed by using Facebook that alcohol was being consumed on the bus.

Result

The claimant’s attorney alleged that the chapter did not provide the property security. He argued that if one bus had security, the other one should also and if it did that his client would not have been injured in a fight. The claim settled for $37,500.

Issues to discuss

  1. What are your policies regarding security?
  2. What are your policies regarding transportation to and from events?
  3. What policies would have prevented this incident from occurring in the first place?
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Scenario

The Chapter’s Vice President of Finance became aware of unusual purchases such as gift cards on the chapter’s account. The Chapter Advisor then noted that the chapter was exceeding their food budget, which led to an audit being conducted. The audit revealed that the House Director was using chapter checks to purchase gift cards for herself. The House Director then purchased personal items under the chapter’s account using the gift card. The House Director purchased approximately $7,000 worth of personal items. The House Director later admitted to purchasing the gift cards and had planned to reimburse the chapter.

Issues to discuss

  1. What procedures do you have in place to avoid this type of incident?
  2. Do you require two signatures on your checks?
  3. Do you conduct regular audits?
  4. Do you segregate duties between volunteers who write checks and those who reconcile the accounts?
  5. Are receipts reviewing monthly?

Some Important Information Regarding Embezzlement Claims

Embezzlement claims are on the rise. We often see more frequent and more severe embezzlement claims during economic downturns. Because of the increase in claims, we wanted to remind you of the importance of reporting embezzlement claims as soon as you suspect that an embezzlement claim may have occurred. According to the policy language, it is a condition of coverage that the organization must

  1. Give written notice to the insurance company at the earliest practicable moment, and in no event later than 90 days after the initial discovery
  2. Furnish affirmative proof of loss with full details to the insurance company at the earliest practicable moment, and in no event later than six months after initial discovery

We have had a recent claim that was not reported within 90 days of it being discovered, which jeopardizes the coverage available to the client in this situation. Unlike homeowner’s insurance, there is no penalty under your organization’s insurance program for submitting an incident, even if you’re unsure whether or not it will arise to the level of a full-blown claim. It is in your organization’s best interest to call us at any time that you suspect any type of embezzlement activity because of the strict reporting guidelines under the embezzlement coverage.

Embezzlement claims are often very difficult and costly to investigate, which is why we have negotiated with the insurance company on your behalf to add expense coverage to the policy. The expense coverage affords the client with $25,000 to spend to document the embezzlement for the purposes of the claim (e.g. moneys spent on forensic accountants, time to procure documents, etc.).

Refer to your Insurance Overview for your location’s specific limits and deductibles for all of the coverages afforded under the insurance program, including embezzlement.

In the event that you suspect an embezzlement claim has occurred, do the following as soon as possible:

  • Notify Heather Cox at MJ Insurance as soon as possible.
  • Remove all financial responsibilities from the individual immediately.
  • Begin the process of developing the details to the loss.
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Scenario

The new House Corporation Officer discovered discrepancies in their accounts which led the House Corporation to complete an audit of their financial records. It was discovered that the former House Corporation Treasurer embezzled approximately $30,000. The former Treasure wrote numerous checks to herself with no receipts or explanations supporting to the payments.

Issues to discuss

  1. What procedures to you have in place to avoid this type of incident?
  2. Do you require two signatures on your checks?
  3. Do you conduct regular audits?
  4. Do you segregate duties between volunteers who write checks and those who reconcile the accounts?

Some Important Information Regarding Embezzlement Claims

Embezzlement claims are on the rise. We often see more frequent and more severe embezzlement claims during economic downturns. Because of the increase in claims, we wanted to remind you of the importance of reporting embezzlement claims as soon as you suspect that an embezzlement claim may have occurred. According to the policy language, it is a condition of coverage that the organization must

  1. Give written notice to the insurance company at the earliest practicable moment, and in no event later than 90 days after the initial discovery
  2. Furnish affirmative proof of loss with full details to the insurance company at the earliest practicable moment, and in no event later than six months after initial discovery

We have had a recent claim that was not reported within 90 days of it being discovered, which jeopardizes the coverage available to the client in this situation. Unlike homeowner’s insurance, there is no penalty under your organization’s insurance program for submitting an incident, even if you’re unsure whether or not it will arise to the level of a full-blown claim. It is in your organization’s best interest to call us at any time that you suspect any type of embezzlement activity because of the strict reporting guidelines under the embezzlement coverage.

Embezzlement claims are often very difficult and costly to investigate, which is why we have negotiated with the insurance company on your behalf to add expense coverage to the policy. The expense coverage affords the client with $25,000 to spend to document the embezzlement for the purposes of the claim (e.g. moneys spent on forensic accountants, time to procure documents, etc.).

Refer to your Insurance Overview for your location’s specific limits and deductibles for all of the coverages afforded under the insurance program, including embezzlement.

In the event that you suspect an embezzlement claim has occurred, do the following as soon as possible:

  • Notify Heather Cox at MJ Insurance as soon as possible.
  • Remove all financial responsibilities from the individual immediately.
  • Begin the process of developing the details to the loss.

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Scenario

After going through the organization’s appeal process in an attempt to have her membership reinstated, a former member filed a lawsuit alleging fraud and breach of contract.  The lawsuit alleged that the organization failed to follow their own internal rules and procedures in terminating the plaintiff’s membership. Throughout the appeal process and the lawsuit, the organization stood by their decision to terminate the plaintiff’s membership. The organization did agree to pay $5,000 to the plaintiff for a settlement, but did not agree to reinstate the plaintiff’s membership.  The defense costs in the matter totaled $66,207.

Issues to discuss

  1. The above claim example demonstrates the importance of following all proper procedures and policies when it comes to disciplinary issues. Even though the organization in this situation felt that they were on solid footing in how they handled the plaintiff’s membership termination, the insurance company still paid nearly $70,000 to defend the claim on the organization’s behalf. What are your organization’s policies and procedures regarding membership termination?
  2. What additional risk management policies might minimize the likelihood of a claim like this happening again?
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Scenario

Two former members accused of hazing alleged that they were not given the required due process in their inappropriate dismissal from the organization.  An actual lawsuit was not filed in the matter. A claim was submitted and the insurance carrier assigned defense counsel who worked with the claimants’ attorney to prove to him that the members were given due process and the termination of membership was appropriate. The claimant’s attorney eventually dropped the claim. However, the insurance company paid over $5,000 in defense costs.  

Issues to discuss

  1. The above claim example demonstrates the importance of following all proper procedures and policies when it comes to disciplinary issues. Even though the organization in this situation felt that they were on solid footing in how they handled the former members’ dismissals, the insurance company still paid over $5,000 to defend the claim on the organization’s behalf. What are your organization’s policies and procedures regarding membership discipline and termination?
  2. What additional risk management policies might minimize the likelihood of a claim like this happening again?
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Athletic sports embody everything about the competitive spirit while teaching players about team dynamics and the rules of fair play. But there is some degree of risk in playing the game – especially if the limits of strength, endurance and speed are pushed. “Athletes who push the limits sometimes don’t recognize their own limitations…,” says the Centers for Disease Control and Prevention (CDC). This can lead to injuries and illness, including sprains and strains, heat illness, concussions and heart failure.

Educational institutions, both public and private, and parks and recreation departments that sponsor competitive sports programs should have a safety and health program that promotes sound practices to help athletes play it safe and stay healthy. Programs may vary depending on the age of participants and the level of competition. In all cases, they should be reviewed routinely to help ensure they are current and comply with applicable state laws and athletic association bylaws as appropriate. They also should review the best practices promoted by athletic associations, such as the National Collegiate Athletic Association (NCAA), the National Federation of State High School Association, state high school and middle school athletic associations and coaches associations, among others.  

Coaches, athletes, school officials and parents all play an important role in helping to ensure safe practices in competitive sports. When a player is not playing it safe or a health issue or injury is suspected, the player should be taken out of play. In instances of an injury or suspected injury or health issue, the player’s condition should be evaluated (including, as appropriate, an evaluation by a medical professional) and the player not returned to the game or sport program until medically released for play. Coaches and athletes should be trained in the signs and symptoms of health-related issues during conditioning, practice and play, including for heat illness, concussions and heart failure, among others, and take timely and appropriate responsive action to help mitigate the health impact.

Competitive sports – playing it safe programs and practices


Athletic programs should include sound risk control principles to help in injury prevention. Some program principles include, but are not limited to:

General risk management principles:

  • Hire qualified, certified coaches and athletic trainers
  • Establish and communicate a policy and procedure for reporting and addressing incidents of youth abuse and molestation. Educate all coaches, athletic trainers, athletes, other school officials and parents on your policy and procedure
  • Ensure all paperwork is signed and received before the start of the season, including: Annual consent and acknowledgment of risk of injury forms and waivers signed by athletes and/or parent, good sportsmanship/conduct forms signed by athletes, annual proof of individual, parental or institutional health insurance (covering sport injuries), an annual medical exam/evaluation and immunization record from a qualified medical professional, giving clearance to play a particular sport
  • Promote a drug-free environment

â—Ź Provide planned and supervised conditioning, practice, competition and travel
â—Ź Comply with applicable state laws and, for NCAA member institutions, all NCAA bylaws

Health, wellness and medical management:

  • Have medical resources/qualified medical professionals in place in the event of an emergency, including the capability of early defibrillation per your state law
  • Educate coaches and athletes on heat illness, sickle cell trait, heart disorders, staph infections (MRSA), sprain/strain and head injuries Put measures in place to mitigate the effects of extreme heat (rest breaks, fluids), and be prepared to respond to signs of heat illness. Provide conditioning and practice exercises within the capabilities of athletes for optimal readiness. Be aware of any medical restrictions for athletes regarding exercising and extreme heat. Teach athletes about the importance of good hygiene, especially regarding skin breaks, abrasions and skin infections, which could lead to staph infections/MRSA
  • Have a written catastrophic injury response plan
  • Have a written concussion management plan Consider the use of baseline testing for concussion management. Baseline testing provides a pre-injury capabilities score for memory, reaction times and cognitive processing and can help medical professionals make return-to-play decisions, post injury
  • Review OSHA’s blood-borne pathogens standard to determine its applicability to your program
  • Require a post-injury release form from a qualified medical professional before an injured athlete returns to play

Additional information for concussion mitigation and management

Concussions can be silent villains – the signs may not be readily detected. They can lead to brain damage, paralysis and, in some cases, death. To help coaches, athletes and parents identify and respond to concussions, a number of organizations offer information on concussion prevention and management, including the NCAA and the American Football Coaches Association. Additionally, the CDC, in partnership with leading organizations and experts, also provides Heads Up: Concussion in High School Sports. In addition to knowing the symptoms and what to do in the event of a concussion, “Heads Up” recommends a four-step Heads Up Action Plan before the season starts, as well as educating athletes and parents.

Facility and equipment:

  • Use safety standards when purchasing mandated personal protective equipment. Maintain and repair equipment at all times. Have a process for athletes to inform coaching staff when equipment becomes unsafe or illegal
  • Provide mandated protective equipment. Train athletes on and enforce use and proper fit
  • Routinely inspect your athletic area/facility, including the warm up area, and playing fields for maintenance, repair and good housekeeping
  • Be prepared for lightning. Education and prevention are key to avoiding risks associated with lightning strikes

An athletic program based on sound safety and health management principles can help schools and park and recreation departments play it safe!

The information provided in this document is provided by Travelers and is intended for use as a guideline and is not intended as, nor does it constitute, legal or professional advice. Travelers does not warrant that adherence to, or compliance with, any recommendations, best practices, checklists, or guidelines will result in a particular outcome. In no event will Travelers, or any of its subsidiaries or affiliates, be liable in tort or in contract to anyone who has access to or uses this information for any purpose. Travelers does not warrant that the information in this document constitutes a complete and finite list of each and every item or procedure related to the topics or issues referenced herein. Furthermore, federal, state, provincial, municipal or local laws, regulations, standards or codes, as is applicable, may change from time to time and the user should always refer to the most current requirements. This material does not amend, or otherwise affect, the provisions or coverages of any insurance policy or bond issued by Travelers, nor is it a representation that coverage does or does not exist for any particular claim or loss under any such policy or bond. Coverage depends on the facts and circumstances involved in the claim or loss, all applicable policy or bond provisions, and any applicable law.

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