Marshik Insurance Agency, Inc.

Archive for February, 2012

Does Volunteering Your Time Mean Volunteering Your Insurance?

Millions of Americans donate time—their most valuable asset—to serve as a volunteer board member on non-profits, booster clubs, churches, PTAs and civic organizations, just to name a few. The decisions these folks make can have a dramatic impact on their respective organization—and not always for the better. If a volunteer endeavor goes bad, would a volunteer board member have coverage against a lawsuit under his or her homeowner’s policy?

Homeowners’ Insurance
The last thing volunteers want to consider is what would happen if their favored organization file suit against them as a result of their efforts. But it happens, and not infrequently. This does happen, especially when volunteers make decisions that directly influence the finances of an organization. Often, the only insurance these volunteers have to back their efforts is a homeowner’s policy. Unfortunately, this policy may be of little assistance.

The reason homeowners’ policies do not usually cover liability stemming from actions as a volunteer is the nature of the claim. The policy is designed to cover claims of “bodily injury,” such as someone slipping on cracked pavement in your driveway; and/or “property damage,” such as accidentally setting your neighbor’s house ablaze when burning some brush on a windy day.

Claims against board members do not usually involve bodily injury or property damage. Rather, they involve bad decision making that results in financial loss to the organization, such as the decision to invest in an IT system that turns out to be a debacle, costing the organization tremendous time and money.

There is another problem. Homeowners policies do not cover “professional services.” This is important to note, because board members are often asked to serve in a capacity consistent with their profession. For example, a church member who is a CPA may be asked to serve on the church’s board as finance chairman. Even though he is not paid for his services, the “professional services” exclusion under his homeowner’s policy would still apply.

In addition to the above, homeowners policies do not cover claims of personal injury unless this coverage is specifically added. Personal injury insurance is added to the homeowner’s policy to cover claims such as libel, slander, wrongful eviction, and false advertising.

What to Do
Events causing claims are unpredictable. While the reasons shown above prove it’s unlikely, not all claims against volunteer board members are excluded by a homeowners policy. Decisions to purchase personal injury coverage and a personal umbrella policy will increase your ability to find coverage for a suit against you. 

The best method for insuring the actions of board members is for the organization to purchase a directors and officers (D&O) liability policy. These policies are relatively inexpensive for most non-profits. Before volunteering, request information on the organization’s D&O policy. The absence of this insurance leaves you at risk of having no personal insurance to defend a suit brought against you by the organization and should influence your decision to serve.  

If you have questions about your personal liability exposures or are interested in a personal umbrella policy (which are relatively inexpensive), give the agents at Marshik Insurance Agency a call.  We will answer your questions and give you a no obligation risk assessment.  Marshik Insurance Agency, your local Trusted Choice agent.  Call 320-632-2328 today.

Business Use of My Personal Vehicle:   Will My Insurance Work?
There are over 240 million registered motor vehicles in the U.S., according to the Census
Bureau. At a given time, as many as a third of those clutter American roadways, and it is
estimated that one-fourth of those are being used in the course of work.
Running errands, making deliveries, visiting customers. Even for those whose
employment is not based on driving, it’s fair to say that your vehicle is an essential part
of your employment. This presents an important question: If you are involved in an
accident in the course of employment, are you covered by your personal auto insurance
policy (PAP)?
Like most insurance questions, the answer depends on circumstance. For example, what
kind of car are you driving? Does the car belong to you or someone else? What type of
business are you in?
Consider the language found in the typical PAP. At a glance, many policyholders are
shocked to see that the PAP appears to exclude coverage for the use of any vehicle in the
course of business other than farming or ranching. However, a very broad exception to
this exclusion allows coverage for the business use of a vehicle provided it is one of three
types: 1) a private passenger auto, 2) a pickup or van, or 3) trailer while used with the
aforementioned. This exception suggests that as long as the vehicle is one of these three
types, coverage remains intact after the accident.
But policyholders should proceed with caution, since some PAPs are not as generous. For
example, some versions may be more restrictive towards pickups or vans, possibly
including a gross vehicle weight (GVW) limitation or a clause that restricts coverage to
owned pickups or vans only. Be sure to consult your policy before driving any pickup or
van for work.
Further, policyholders should understand that any coverage permitted for business use of
personal vehicles by the PAP is not intended for these three vehicle categories:
Commercial-type vehicles. The PAP restricts business use to private passenger autos,
pickups and vans. While they can be purchased personally, box trucks, tractor trailers,
shuttle busses and other commercial-type vehicles do not fit this description; such
vehicles require a commercial auto policy.
Furnished or available for regular use. Often called the “company car” exclusion, this
provision is dangerous and must be remedied if the exposure exists. The reason is that a
typical PAP will exclude coverage for a vehicle that is regularly available to the
policyholder but is not specifically insured under the PAP. For example, if you are
furnished a company car as a benefit to your employment, make certain that you are
covered by your employer’s auto insurance policy. If not, specific action is required to
extend coverage under your PAP; it will not do so automatically. The good news is that
this coverage change is usually inexpensive and can be done easily; just be sure to
request the change now, before the accident happens. While the definition of furnished or
available for regular use varies by case, err on the side of caution. Don’t assume that
because you don’t take it home with you each night or that you only drive it occasionally
you’re in the clear. Regardless, a vehicle owned by your employer could be considered
available for your regular use. This exclusion presents a potential gap that is too risky to
ignore; your Trusted Choice® insurance professional can help you take the appropriate
steps to close it.
Vehicles that are the business. A PAP will not cover your vehicle if you use it to carry
people for a fee, such as a taxi, limo or shuttle. The only exception is a share-the-expense
car pool. And if you’re planning to make a few extra bucks delivering pizzas, auto parts,
newspapers or other goods, proceed with caution. Many PAPs also remove coverage for
vehicles that are used to deliver food or other types of property for a fee.
While in most cases the PAP will cover you for business use of a personal vehicle, there
are situations where it will not. Such situations are not uncommon and, if not remedied,
could result in significant financial detriment for you and your family. Consult your
Trusted Choice® insurance professional for advice on how to close potentially
devastating gaps in your PAP today.

Call the Marshik Insurance Agency, your local Trusted Choice agent, at 320-632-2328 with your questions.