Nonprofits Insurance Alliance

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Winter is Coming – Property Checklist

The holiday season is upon us and with all of the stress generally associated with this time of year, you probably haven’t given much thought to frozen pipes, roof collapses, ice dams, or any of the other property maintenance issues that can lead to water damage. However, as illustrated in one of our recent blog posts, water property damage can be costly, and is often not covered by insurance. Given that there is an increased risk of water damage this time of year, it’s vital that your nonprofit plan and prepare for the upcoming winter season.

If you haven’t read our blog on water damage claims, you may not be aware that typically, property policies exclude water damage unless something else is accidentally or suddenly damaged first, such as with wind or fire. For example, let’s say the gutters on your building are rusty and water is not being properly diverted off your roof. Then a rainstorm comes along and pushes water through the weakened area into your roof and water leaks under the eaves, into your walls, and starts to pool. Because this damage is due to improper maintenance and not a sudden, unforeseen event, it is not covered by your insurance.

Whether it’s a slow leak, a frozen pipe, or a full-fledged flood, water damage can have a negative effect on your organization and its ability to provide services to the community. Not only can water and moisture damage the interior of your building, but it can also damage or destroy fire protective equipment and electrical equipment. Another unforeseen issue that is more likely to arise in the cooler, wetter months as a result of unwanted water or moisture is mold. Like most water property damage, mold damage is generally not covered by insurance, as it is considered preventable with proper maintenance.

While every building is unique, each is at risk for water damage, whether from a minor roof leak, improperly maintained plumbing, or a violently destructive storm. Before the weather takes a turn, give your premises a good lookover for early signs of damage or wear-and-tear, including damaged flashing, gutters and drainpipes, or broken windows. Identify and repair all leaks and cracks in windows, doors, and exterior walls, as well as in the building’s roof, foundation, plumbing and HVAC systems.

A properly maintained building is only part of protecting your organization’s facility from water damage. Also be sure to check all drains, gutters and down spouts for leaf litter, debris and other clogs or obstructions that cause water to collect or travel toward a building. Remember, standing water is a tell-tale sign that water is not draining properly. As a precautionary measure, also consider labeling your water shut-off valves clearly so that they are clear and noticeable, in case of an emergency plumbing situation. Repairing damage early can prevent more extensive damage from winter weather conditions.

Here are links to a few resources from the Insurance Institute for Business & Home Safety (IBHS) for your reference:

From the Claims Files: Woeful Website Wording

The chances are that your nonprofit has a website. In the digital era, creating and maintaining a website is almost unavoidable. It explains your nonprofit’s mission and programs to current and potential supporters, solicits donations, and provides additional information on events and fundraisers. The fact of the matter is, your website is the face of the organization.

Given the importance of your nonprofit’s website, it shouldn’t be a surprise that choosing your wording with care and caution is a must – so that visitors are not only engaged and interested in your nonprofit, but also leave with a clear and accurate understanding of what your organization does. Without clear language, individuals in the general public may misconstrue what it is your organization does, and as a result, could end up suing for damages. Unfortunately, that’s exactly what happened to one of our nonprofit members.

The Claim

The nonprofit runs a halfway house for men with dual substance abuse and psychiatric issues. Their clients come into the program after being discharged from hospitals, to make sure they’re stable and can establish both a job and a place to live. One such client, who we’ll call John, entered the program to manage and treat both schizoaffective disorder and an addiction to methamphetamines. During the intake process, John told the organization that he was single and had no spouse – this turned out to be a lie and while John was in treatment, his wife filed for divorce. Despite this, John’s condition was stabilized, he found a job and an apartment, was discharged from the program, and by all accounts was doing well.

After seeing how well things were going for John after he was discharged from the program, his wife tried to re-enter the picture and showed up to his new apartment to reconcile. As the couple was about to become intimate, John’s wife discovered that he had a visible STD. It was subsequently discovered that John had been having an affair with a staff member at the nonprofit, and they were now in love.

The staff member was let go as a result, but John’s wife sued the nonprofit for emotional damages caused by the relationship. Initially, it was deemed that she had no standing in court as she was not a client of the nonprofit, so the judge dismissed the claim. However, she then amended her complaint based on the fact that the nonprofit’s mission, as listed on their website, was to help addicts and their families. The inclusion of families in the nonprofit’s mission meant that the wife could be included under the umbrella of who is being served by the organization.

In the end, it was ruled that the website’s text did not mean that John’s wife was owed anything by the nonprofit, and the suit was ultimately dismissed. However, this claim had the potential to cause of lot of problems for the nonprofit, had the court agreed with the wife that the word “families” meant she was a client of the nonprofit organization.

Lessons Learned

Although this claim did not result in liability for the organization, it highlighted the potential that words used in nonprofit marketing materials, such as websites, have the potential to create legal liability. Words describing services can be alleged to be an implied-in-fact contract or create a legal relationship which can create a legally-enforceable duty to act in a certain manner. So what’s the takeaway from this nonprofit’s story? Your organization’s wording, on its website and elsewhere, is critical. For that reason, carefully examining what you’re communicating and how, is essential – not only to ensure it’s accurate and engaging, but also to ensure that you’re not opening your organization up to unanticipated liability. Legal review of such materials or disclaimers may be appropriate risk mitigation tools for those nonprofits in highly regulated industries, such as health care.

Transporting Vulnerable Populations

Transportation provides a vital lifeline for vulnerable populations to access employment, education, healthcare, and community life. Your organization may transport disabled individuals, developmentally disabled children or medically fragile seniors, or it may 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. 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?
  • 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?

To keep your clients safe, it’s essential to know the answers to these questions. Why? What could go wrong? Here are two examples from our claims files:

High-Risk Clients

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.

Lack of Training

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. She stopped and righted it, not noticing that the tie-down straps were loose. Meanwhile, the woman 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.

 

Use of Non-Owned Autos

Does your nonprofit have employees or volunteers that use their personal vehicles on behalf of your organization, for purposes such as running errands, performing services, or transporting 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. Unfortunately, this is a situation where what you don’t know may very well hurt you!

Your organization can be held responsible for any liability associated with operating that 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.

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 (a sample policy is available on our secure site for current members of the Group)
  • 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

Accident claimants and their lawyers will seek recovery from as many sources as they can, so don’t leave your nonprofit vulnerable! 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. We have seen both large and small claims 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 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.

 

Claims You Won’t Believe: Contraception as Contraband

Reproductive freedom and the right to privacy, for minors especially, can be murky territory, with laws differing from state-to-state. In fact, only 26 states and the District of Columbia currently allow minors aged 12 or older to receive contraceptive services without parental approval. But how do these rights work when there’s no parent or guardian involved? What if contraception is legally permissible for minors in a state, but another party steps in and assumes the role of the guardian in making these decisions regarding their right to reproductive health care? One Nonprofits Insurance Alliance Group member in California found out the hard way — read below for their experience.

The Claim

A California nonprofit group home for foster teens was sued by current and former residents asserting a violation of their right to privacy and a denial of their access to reproductive health care. The group home required the teens, as a matter of policy, to be abstinent in order to reside in the group home. While they had no formal policy prohibiting residents from obtaining birth control, the group home admitted taking condoms and other forms of birth control away from the teen residents and penalizing them under their privilege-earning system for possession of what they deemed contraband. The suit also alleged that access to reproductive health care appointments was restricted, and that the teens were not allowed to meet alone with their medical care provider, if requested. The teens were represented by two national, nonprofit public interest law firms that promote youth and reproductive health care rights. The lawsuit sought damages and injunctive relief, which is a court order prohibiting the group home from continuing its practices in this regard, and attorney’s fees under the Private Attorney General Act (PAGA). The suit received extensive publicity.

The lawsuit was based on a violation of the right to privacy guaranteed under Article I, Section 1 of the California Constitution, which applies to public, as well as private entities. It also alleged negligence of the nonprofit for failure to supervise, evaluate and train childcare staff to ensure that they understood the healthcare rights of foster youth as required under California regulations, which includes the right to confidentiality and access to reproductive health care. The suit also alleged failure to follow the Caregiver Resource Handbook issued by the county (which placed the teens in foster care) as it pertained to reproductive healthcare.

While the suit was founded primarily on California law, it did cite the federal case Arneth v. Gross, which determined that the right to access reproductive health care extends to minors in foster care. Under the more narrow federal right to privacy, the Arneth court found that “minors have a constitutional privacy right to practice artificial contraception absent compelling state considerations to the contrary, and this is not diminished because they are in foster care.”

Due to the risks of a large potential damage award, and negative publicity, this case was settled in mediation. While each of the five claimants received a modest settlement of $5,000, the plaintiffs sought an attorney’s fees award available under PAGA. When this issue was submitted to arbitration, the plaintiff’s attorneys were awarded a staggering $400,000.

Lessons Learned

Access to reproductive health care rights for those in residential care is highly regulated by local, state, and federal statutes, as well as the state and federal constitutions. As this claim demonstrates, impairment of those rights can be a huge risk to a nonprofit residential care provider. To avoid such a claim, nonprofits must understand the rules and laws of their jurisdiction concerning the right to reproductive health care for those in their custodial care, and adopt policies and train staff to ensure that those rights are respected and preserved.

 

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