Your liability coverage insurance might not be enough for your nonprofit
Adapted from content originally published by the Nonprofits Insurance Alliance Group.
Does your nonprofit provide transportation services for those in need? Transportation provides a vital lifeline for vulnerable populations to access employment, education, healthcare and community life. Many nonprofit organizations frequently transport clients to necessary medical treatments such as chemotherapy, dialysis or physical therapy. Transportation clients could include children, expectant mothers, the elderly, disabled individuals or the medically fragile. Transportation may take place in company-owned autos, as well as in vehicles owned by the nonprofit’s employees or volunteers. Your company may also transport individuals in wheelchairs or other special mobility devices. Regardless of the individuals being served, there are many factors that come into play when providing safe transportation to these more vulnerable populations.
All successful nonprofit organizations have a risk management plan in place, or at minimum, a contingency plan. In other words, nonprofits should take steps to prevent accidents from occurring. For nonprofit organizations, a great risk management plan would have the proper risk-mitigation efforts in place that would help avoid certain pitfalls. When reviewing your transportation programs, it may help to ask yourself the following questions:
- What written policies and procedures are in place to ensure client safety and protection against liability? How will they be enforced?
- What is the level of knowledge and training required for drivers to ensure that clients are safely transported? Do your drivers know that smooth operation of the vehicle is extremely important in transporting individuals with disabilities?
- How do I demonstrate through my recordkeeping that my staff are trained to proficiency in the types of autos they are responsible for driving?
- Are your vehicles in good working order? Do they have proper securement equipment for mobility devices?
- What are the established safety standards and restraint systems for securing and transporting wheelchair bound clients?
Does your nonprofit have employees or volunteers that use their personal vehicles on behalf of your organization to transport clients? Many nonprofits do not realize that their organization has an additional and potentially serious exposure to loss that arises from employees and volunteers using their personal vehicles. Volunteers or employees who use their own vehicle to provide transportation services should be covered by non-owned auto liability insurance. The risk should be calculated before putting these drivers behind the wheel, however, there are a ways to minimize the risk. Your company can reduce risk by asking drivers for safety records, proof of insurance, or even by providing drivers with basic car safety training.
If you have any individuals driving a personal vehicle on behalf of your nonprofit, even for short errands, at a minimum you should:
- Have a written driver policy, which is signed by the individual driver
- Require that individuals have an authorization from your nonprofit before driving a personal vehicle
- Get a copy of the employee’s current driver’s license
- Require proof of personal auto coverage and get updated copies at each policy renewal
- Purchase a non-owned auto insurance policy for your nonprofit
For better risk management, also consider running an annual motor vehicle record check or use a “DMV pull program.” This is highly recommended for organizations that have a significant non-owned auto use related to the delivery of services (e.g., meals on wheels, neighbor-ride programs). Knowing more about this exposure and implementing some simple risk controls can help protect your nonprofit from financial loss.
It is important to remember that your organization can be held responsible for any liability associated with operating a vehicle, since it may be held responsible for the actions of employees and volunteers during the course of service or employment. Although the individual has personal insurance to cover their own liability, that coverage may not be adequate to cover the full extent of damages incurred, in which case a claimant may then pursue your nonprofit.
The reality is that an auto accident, without the proper insurance coverage, could financially cripple your organization. The following examples offer a view into the hidden dangers of transportation services:
The first example features a community support agency that provides transportation for seniors to medical appointments. One of their clients was known by the member to unbuckle himself when being transported. The driver on this occasion knew of the client’s behavior and had refused to transport him earlier that morning; the afternoon driver, however, was not aware of this client’s behavior. The driver secured the client, who later unbuckled himself and fell. He subsequently injured his knee, which required surgery.
The investigation into this incident also revealed that the van was not equipped with federally-mandated shoulder harnesses or lap belts, making the van illegal to transport wheelchair bound individuals. The agency narrowly avoided an attempt by the client’s attorney to recover enhanced damages which might have been awarded due to the possibility of being charged with a violation of the Americans with Disabilities Act. The claim cost $350,000 as a result of the injuries incurred.
The second example features another community services center; where drivers transport clients with physical and mental disabilities to do errands, such as going to the laundromat. On the day of the incident, there were three clients on board in the van, one of whom was in a wheelchair. The driver for the nonprofit member had put the client, a 35-year old woman with a congenital brain disorder, on the lift and strapped the chair down with all four straps, as she usually did. In the middle of a left turn, the chair tipped over. The driver stopped and righted it, not noticing that the tie-down straps were loose. Meanwhile, the client had hit her head and become unresponsive. The driver traveled back to the center immediately, where an ambulance was called. The client’s head injury resulted in a severe worsening of her condition. During the investigation, the driver stated that she had never received any training in how to properly tie down a wheelchair. The family of the client made a claim through their attorney and it eventually settled for $800,000.
Bodily injury claimants and their attorneys may seek recovery from as many sources as they can, so don’t leave your nonprofit vulnerable! Drivers need the proper training and coverage to avoid financial devastation. There are different types of insurance policies for nonprofit institutions such as non-owned auto coverage. Non-owned auto coverage applies when damages exceed the vehicle owner’s personal auto insurance limits, or in situations where a vehicle owner’s primary coverage declines a claim. Both large and small claims have been related to non-owned auto use, one of the largest being $2 million. Without a non-owned auto policy to protect them, that nonprofit would likely not have survived.
For peace of mind regarding nonprofit auto insurance or other related insurance questions, we strongly recommend discussing your auto exposure with an insurance broker. A broker represents the insurance customer, and ensures that your organization carries sufficient insurance coverage for your unique exposures. Having a representative that is knowledgeable about proper coverage will reduce the chance of risk.
The Nonprofits Insurance Alliance Group is a group of nonprofit insurance cooperatives that serve only 501(c)(3) nonprofit organizations. The Group is rated A (Excellent) VIII by A.M. Best and currently operates in 32 states and the District of Columbia, insuring more than 17,000 nonprofits.