I recently had the opportunity to connect with Olivia Reed, licensed insurance broker, and Director at BMS Canada Risk Services Ltd. (BMS). BMS is a specialist insurance brokerage that has a national team dedicated to working with associations and association members across Canada. Olivia shared information that is particularly relevant for association board members or members of the association who are responsible for insurance coverage.
Q: There are so many different types of liability insurance policies. What policies should associations have?
A: The main policies that we recommend associations consider are Directors’ & Officers’ (D&O) Liability, Commercial General Liability (CGL) or an Office Package, and Cyber Liability. Depending on your activities and operations, you may also require Errors & Omissions insurance. If your staff and/or board travel on behalf of the association, you may want to consider a Business Travel Accident policy.
Q: What is Directors’ and Officers’ Liability?
A: Directors’ and Officers’ (D&O) Liability Insurance is coverage that protects the association and the associations’ directors and officers from financial loss that may result from allegations and lawsuits regarding wrongful acts or mismanagement in their role as an appointed board member. Furthermore, this includes claims arising not only out of the actions of directors and officers, but also of employees, volunteers, and committee members.
Q: When would D&O Liability Insurance be needed?
A: D&O Liability responds when an error, omission, misleading statement, neglect, breach of duty, employment practice violation, or wrongful act – such as discrimination or harassment – is alleged against any person acting in their capacity as an appointed board member or representative of the association. Every association should have this coverage.
Q: What is Commercial General Liability (CGL)?
A: CGL is designed to protect against claims arising from injury or property damage that you or your association may cause to another person because of your operations and/or premises. For example, a visitor may slip and fall on a wet floor at your association’s office and look to hold the association responsible for their injury. Moreover, a volunteer may accidentally cause property damage when representing your association off-site.
If your association also has commercial contents to insure, you may want to consider purchasing an office package. This is important coverage for an association even if they have a very small office. This package generally includes CGL, as well as coverage for office contents, crime, and business interruption.
Q: What if an association does not have an office?
A: An association can purchase standalone CGL with no office contents insurance if they do not have an office or office equipment.
Q: What does an office package cover?
A: An office package policy insures against damage to contents, including equipment such as computers, and loss of revenues caused by an interruption of business activities arising because of an insured peril (e.g., a fire).
In addition, crime coverage protects against financial loss due to some or all of the following:
- theft of money, securities, or other property owned by the association
- and others.
Q: What about Cyber Insurance? There has been a lot of discussion about this in recent years. Is it necessary?
A: Well, imagine that your server has been compromised by malware, potentially exposing confidential employee or member information. What would you do?
Some organizations may have little or no planned procedures in place to address a breach of cyber security and/or of confidential information. Also, they may not necessarily understand the implications of a data breach. It is important to have a Cyber Liability policy in place to provide protection against such claims. Most policies also provide access to experts to call if an incident occurs and immediate support is needed. This support is important as the initial response to a cyberattack can often reduce the overall impact an incident may have to your association.
For common forms of cyberattacks, check out Cyber Attacks and Associations
Q: Has COVID-19 directly impacted insurance for associations? If so, how?
A: One of the biggest impacts of COVID-19 is the addition of exclusions relating to communicable disease/viruses on insurance policies. This includes Commercial General Liability, Property (Office Package), and event insurance policies. Accordingly, it is important to ask your broker to outline the exclusions in your policy. What is included? What differences will you see when renewing coverage in 2021.
Q: When looking to purchase insurance for their association, what should an association look for in an insurance broker?
A: It is key to partner with a broker who works closely with the non-profit and association sector that can provide the right advice and insurance solutions. In addition, your broker should provide information and detail in advance of your renewal. It is important to make time to understand any changes in premium or coverage that the insurer may be proposing. This will allow the association time to seek an alternate quote if desired.
Q: What advice would you give an association board member or employee who does not know very much about insurance?
A: Take the time to go through all the relevant details of your association with an insurance broker. They will be able to explain how these details may impact your risk profile or coverage needs. Details such as number of staff, annual revenue, and past claims history are all important pieces for premium calculation. Furthermore, don’t be afraid to ask questions and get clarification when needed.
Thank you to Olivia for the interview, and her knowledge of insurance policies and coverage for associations.