Associations are exposed to similar risks as an ordinary business, from liability concerns to protecting assets and staff, so having the right insurance coverage is critical to safeguarding the organisation.
This checklist is to help association managers identify potential risk exposures and how to address them with relevant insurance solutions.
Associations come in many forms — professional bodies, community-run charities, sporting clubs or licensed organisations. Some associations are incorporated and this creates a legal entity that's separate from the individuals involved, which gives some protection from liability, but it may not fully shield the organisation or its members from liability in cases of alleged negligence. Insurance is essential to mitigate risks and ensure the continuity of the association's operations.
10 questions to identify what insurance your association needs
Having the appropriate insurance ensures an association is covered for potential liabilities, injury or loss, and that the organisation's property, equipment and materials are protected. To consider if your association is adequately protected, consider these critical questions.
- Is your association already insured under a government or funding entity scheme? Avoid over-insurance by checking existing coverage or determine if you can reduce the limits of your association's own insurance.
- Does your association interact with the public? Associations commonly engage with the public, whether through events, fundraising activities or day-to-day operations. Public liability insurance is essential cover for physical risks, such as slips and falls at your premises or event locations, as well as other liabilities, like damage to third-party property or accidents during off-site activities. If your association sells products, such as food for fundraising at particular venues or events, public liability insurance can also protect against claims for product-related injuries or illnesses.
- Are your board members protected from legal actions? Directors and officers' liability insurance protects board members and senior leaders from personal financial loss if they face legal claims related to decisions made in their official capacity. These claims could arise from alleged mistakes, oversights, or mismanagement, such as failing to comply with regulations, breaching fiduciary duties, or making decisions that negatively impact the association. This coverage ensures that board members are not personally liable for legal costs or damages stemming from their professional responsibilities.
- Does the association own equipment or other assets? Consider the risk of assets being stolen or damaged, which property insurance covers. You may be able to reduce premiums by implementing security measures such as deadlocks, alarm systems and security lighting.
- Do you own or lease building/s? If so you will need building insurance in case of fires, storms or vandalism. If the building is leased, seek to check the contract to ensure the owner has insured the property.
- Does your association handle funds? Fraud or fidelity insurance covers your organisation against misappropriation of funds by employees or committee members.
- Does your association provide advice or services such as in-home care? Professional indemnity insurance covers individuals in the organisation against claims of breaches of duty or negligence in an authorised capacity.
- Are your staff, officials and volunteers covered for accidents? If there was an accident suffered by a non-employee such as volunteers, officials or committee members (not covered by workers' compensation) resulting in injury or death while conducting association business the support of personal accident insurance can cover costs, sometimes including loss of income if the victim is unable to work. In addition, workers' compensation insurance is mandatory for employees for work related injuries or illnesses — to cover impacts such as medical expenses, rehabilitation costs and compensation for lost wages during recovery.
- Do association parties travel as an aspect of their involvement? Travel insurance is especially important if your organisation participates in international activities.
- Is the association vulnerable to a cyber breach? Cyber insurance policies generally cover direct losses suffered by your organisation from data breaches or cyber attacks, and may also cover liabilities to customers or other third parties.
Tips to optimise your association insurance
Insurance coverage can vary considerably between providers. This checklist may help you ascertain which policies will best suit your organisation and flags some potential gaps and protections to consider.
Key components to assess in insurance coverage:
- coverage limits: how much does the policy cover you for?
- is there an excess payable if you make a claim? How much? Does this apply to every claim made?
- exclusions: what won't the policy cover? Is it essential to your activities?
- are you and your members/staff/volunteers covered if you're interstate or overseas? Do you need it to?
An insurance broker can help your association identify the optimal coverage and terms for your activities and risk exposures. Be aware that if members undertake activities outside of normal operations it's best to check with your insurer that they will be covered.
Bundling your association insurance policies with one insurance provider can help centralise your insurance cover and may help obtain a lower premium.
If your association works with other aligned organisations with similar needs it may be possible to pool your coverage, which may help achieve a competitive deal.
How Gallagher can help
Trust the association experts to find the right insurance for you. Gallagher is the broker of choice for associations across Australia, offering tailored insurance solutions that provide the right level of cover and outstanding service.
