OG - Board - Insurance

Insurance

We have insurance for Board Members thru American Family Insurance.  

Business Key Policy (Commercial General Liability Coverage) Cost is approx... $340 per year

Agent Contact Info: 

Abbie Davis Agency
303-333-0205    
www.amfam.com 
1-800-692-6326
2855 N. Speer Blvd. Ste. D,
Denver, CO  80211,
ADAVIS1@AMFAM.COM

Policy Number: 05XT-4239-01-49-BLBK-CO or 018-430-156-33

Annual renewal in September i.e.:  09/01/2013-09/01/2014, etc.

Addendum:  02/20/2015 - Insurance is paid up to September 2015

Addendum:  08/22/2015 - Results of Insurance Review

Results of the HRHS Insurance Coverage Review

At Nancy’s request, I have been reviewing the HRHS legal documents.  One of the areas of research has also been insurance. 

We currently have a Commercial General Liability Converge policy with American Family Mutual Insurance.  The coverage provided includes the following:

  • Personal & Advertising Injury Limit           $  2,000,000.00
  • Damage to Premises Rented to You Limit        $    100,000.00
  • Medical Expense Limit – Any one Person        $     10,000.00

As a Non Profit Organization, our areas of liability exposure are limited.  My concerns would only be in the following areas:

  • Physical injury to an attendee at any event in which we are involved in sponsoring.   This would include, Monday evening speaker events, 4th of July float, HRHS sponsored tours, etc.   Basically any event in which the HRHS could be considered as being involved or sponsor.
  • Any damage to property in which it could be determined we have any control over.
  • As the Monday evening speaker events are primarily attended by senior citizens, the possibility of tripping or falling, such as on the steps, is increased. 
  • In the case of an injury at a rec center, the rec center would be the first to compensate.  However, if the injury is severe and an attorney becomes involved, the attorney’s paint their defendants in a civil suit with a broad brush.

The cost of the Commercial General Liability Converge is $300+ for one year.   In obtaining estimates from other providers, I determined the cost and coverage was in line with other carriers. 

Conclusion:  I would not recommend making any changes.

An area of exposure in which I feel we are venerable involves each of us personally.  If in the conduct of our duties as a Director or Officer of the HRHS Corporation, we have the potential for legal action to be brought against us.  Our current Commercial General Liability Converge does not afford us any protection as individuals, it only protects the Corporation.

Under normal circumstances, the Corporation would provide defense in that event.  However, due to the Corporation’s limited financial capability, I am afraid relying on that defense would be disastrous for the individual.   

The way Corporations protect their leaders is with insurance called Director and Officers Liability Coverage.  After a small deductable, the insurance then provides the legal defense and in the event the suit is lost, it covers the amount awarded the Plaintiff. 

The cost for Directors and Officers Coverage runs in the area of $800 annually.  

An alternative to the HRHS acquiring this type of coverage is to rely on each Director to assume personal responsibility in the event this situation occurs.   Here are two suggestions:

  • Depending upon the terms of your current homeowner’s coverage, I would suggest that each contact your agent.  Let him know that you hold the position of Director (if you also hold the position of President, Treasurer or Secretary, you are also an Officer of the Corporation and this must be noted) on the HRHS, which is a Corporation.  Ask the agent, “If in the event that as a Director (and/or Officer) of the HRHS, you are sued, does my current home owner’s coverage provide me with legal and financial coverage?”  Generally when the insurance company underwrites the homeowner’s policy, questions such as activities and involvement are asked in order to determine the company’s risk and the policy premium.  If your current status was not noted properly at the time the application was made, you may not have protection.  If you do not already carry an Umbrella Coverage, I would suggest you ask about it.
  • The other alternative is to have Deep Pockets.

Conclusion:  I would suggest that the Board, each do their own research to determine personal coverage prior to spending time discussing the option of obtaining D & O Coverage.  I would also recommend establishing a date, which allows ample time to visit with your agent, for the Board to discuss and decide how they want to handle this.  With the personal exposure each have, the results of the decision needs to be decided and become part of the minutes.

Document is current as of 03/05/2018 - dkhill