We recommend that you complete a House Inventory Checklist and review it once a year. For more information about the property coverage, please click here.

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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

The employee fell on the ramp outside the house and injured his leg. The insured disputed the employee’s injury because he was working the next day and was not limping. The injured employee then told the insured he would be off work because the doctor did not know the full extent of his injury without an MRI. Despite the concerns of the insured, the claim was accepted. The employee was released to work, but with restrictions with which the insured could not comply. The doctor requested surgery on the employee’s knee, which the employee wants to do; however due to the employee being overweight, he could not find a surgeon who would operate. The issue is whether the carrier is liable for the injured employee’s gastric bypass surgery, which the employee looked into before the injury. The carrier submitted their opinion to panel doctors, and they found the carrier is liable for the bariatric surgery. The injured worker’s knee surgery is on hold until the bariatric surgery is completed, and the employee is a better candidate for knee surgery.

Result

In summarization, there was an admitted knee injury but due to non-industrial health issues (obesity), the employee’s attorney and adjuster agreed to an Accredited Medical Exam specifically on need for bariatric surgery on industrial basis. The report confirmed the liability on the carrier to provide surgery, which is scheduled soon. The workers’ compensation carrier has paid $59,757 thus far and has set aside an additional $78,884 in reserves (what the carrier expects to pay additionally).

Issues to Discuss

  1. What procedures do you have in place to prevent slips and falls?
  2. What policies could have been in place to prevent a claim like this from happening in the first place?
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Scenario

According to a report completed by the Chapter Advisor, there were three chapter members conversing about the fire escape outside the window of the second floor.  One member, who admitted she had previously been out on the escape, showed the other two new members that it was possible to go out onto the fire escape from the window of the room.  The older member successfully got out on the escape.  One of the freshman women attempted to do the same and slipped and fell one story to the ground.  The women fractured her jaw in 8 places requiring surgery, lost 7-8 teeth and received various soft tissue injuries related to the fall from 15 feet.

Results

Parents of member have retained an attorney and a reserve of $350,000 has been placed on the claim by the insurance company.

Liability Concerns

The fire escapes were used by the house residents as “balconies.”

  • Risk Management solution:  Written rules, by laws, contracts, handbooks or other correspondence methods should address inappropriate use of roofs, bodies of water, fire escapes, basements, attics, etc.

The prior House Director knew that the residents were using the fire escape as balconies.

  • Risk Management solution:  A specific person or persons should be responsible for making sure that rules are adhered to.  This person or persons must have authority and make sure all persons conform to these rules.  Persons living in the house must be held accountable to these rules.

The access ways to the fire escape had no signs posted.

  • Risk Management solution:  Signage is very important for instructions and awareness purposes.  Post signs in access ways that clearly indicate that the fire escape is to only be used for emergency purposes.

A light which was affixed to the wall just above the fire escape was not working.

  • Risk Management solution: The appropriate employee should be conducting comprehensive house inspections and giving the property manager written items that need correction.  This should also include a follow-up procedure to make sure that corrections are made in a timely fashion.

The witnesses all stated that they have never been advised of any prohibitions against using the fire escape.

  • Risk Management solution:  House Corporation should have a meeting with the Chapter members once every semester to educate the members on the House Rules and the minutes of the meeting should reflect said instructions.  Signs should be posted near the escapes that state “for emergency use only.”

A chair was present on the third-floor fire escape which had been present for three years according to one witness.

  • Risk Management solution:  An assumption could be made that the members were using the chair to sit in while using the fire escape in an improper manner.  Clearly communicate to employees the procedures for reporting to the House Corporation any House Rule violations.

One witness stated that the house members regularly used the fire escapes as balconies and were never told not to.

  • Risk Management solution:  House Corporation should have a meeting with the Chapter members once every semester to educate the members on the House Rules.

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Scenario

A sprinkler head in a closet on the second floor went off resulting in water damage to the first and second floor, as well as the basement. The exact cause of the sprinkler head going off is not able to be determined. It is believed that the heat in the closet may have been a factor.  The expert hired to determine the cause noted that the sprinkler heads in the house were approximately 30 years-old and were either corroded or leaking.

Result

The final cost of this claim was $498,444. There is no subrogation potential against the manufacturer of the sprinkler system or the company who installed it as the House Corporation did not maintain any records regarding when the system was installed or when it was inspected.

Issues to discuss

  1. Is your sprinkler system inspected on a regular basis? How do you ensure that the sprinkler system is inspected annually?
  2. Do you maintain all of the records from the inspections?
  3. Does your house have an alarm when the sprinkler system is activated?

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Scenario

A member was using a deep fryer in the kitchen to heat oil. The member walked away to another room, and the fryer caught the cabinet and microwave on fire. The fire damage was contained to the kitchen. However, there was smoke damage throughout the house.

Result

A total of $47,972.09 was paid out for the claim.

Issues to discuss

  1. Are residents allowed use of the commercial kitchen equipment? If so, what are the regulations regarding the use of the commercial kitchen equipment? See below for our risk management response to this practice.
  2. Discuss safe alternatives to the members using the commercial kitchen equipment
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Scenario

A fire broke out in the attic of the chapter house from what they believe was some insulation that fell between the wall and flooring landing on some wires and ignited. The attic was not sprinklered and sustained all of the damage below. However, as the claims progress in the cleaning up and repairing of the attic space, the state building code regulations had to be addressed. The wing where the fire originated was built in the early 1900s, and they could not let the members back into that area until some of the original construction items were upgraded even though they were not affected by the fire (e.g. some of the members had to be moved to other facilities, the insured had to pay for additional meals as the kitchen could not be used).

Result

The code compliance issues drove the cost of claim over $1,000,000.

Issues to discuss

  1. What policies do you have in place in the event of a severe and lengthy property claim? (i.e. where will you house displaced chapter members? How can you minimize extra expenses associated with the claim?)
  2. Do you regularly inspect your attic space? Is your attic sprinklered?
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Subrogation – the legal process by which an insurance company, after paying a loss, seeks to recover the amount of the loss from another party who is legally liable for it.

Scenario

An extensive fire occurred on the top floor and roof of the chapter facility resulting in a total claim amount of $1,379,877.  Due to the size of the loss, the file was referred to the Subrogation Department immediately. Subrogation Counsel was assigned, as well as a Cause and Origin expert. After the expert’s inspection, the subrogation attorney assigned an electrical engineer to inspect the evidence. The experts were able to identify that an electrician working in the building knocked wiring loose, which resulted in the fire. Upon conclusion of the loss adjustment, a demand package was sent to the electrician’s insurance carrier.  Mediation between the electrician’s insurance carrier and the organization’s insurance company took place. The case did not settle during mediation, but did settle shortly after. The two parties negotiated a settlement and avoided litigation and incurring further litigation costs.  

Result

The insurance carrier was successful in recovering $700,000 on behalf of the organization.

Important!

If you have a loss, please do not throw anything away without speaking to an adjuster first. If you have to begin mitigation due to water damage, please take photographs before moving or tearing anything out. Subrogation could be compromised by discarding parts or failing to take photographs to document the damage.

Issues to discuss

  1. What procedures do you have in place to properly document claims when they occur?
  2. What procedures do you have in place to address issues after a large property claim (e.g. alternate housing for the chapter members, building/code requirement changes, loss of income expenses, etc.)?

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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

At a fraternity chapter house that was hosting a party, Jane Doe, chapter member, went out a second-floor door to a fire escape platform and fell through the hole, which provided a ladder access to the ground.

There had been a previous fall from this fire escape at the chapter house in question, and the chapter leadership posted a hand-made warning sign at the exit to the fire escape as a warning.

Result

Jane Doe suffered serious injuries and sued the Fraternity and House Corporation. The national Fraternity was dismissed from the lawsuit; however, the House Corporation was found 56 percent at fault with nearly $120,000 in damages.

Issues to address:

  • The fire escape had already caused problems at this chapter, and the House Corporation did not address those concerns properly. Once a dangerous condition at the property is revealed, it must be appropriately addressed.
  • How should the concerns about the fire escape have been addressed after the first incident?
  • What risk management policies does your Chapter/House Corporation have in place regarding fire escapes?
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