Volunteer Wrongful Acts Insurance Coverage – Should You Add This To Your Homeowners Insurance Policy?

America is a land of volunteers.   Almost everyone you know has volunteered somewhere at some point in his or her life and many people have regular work as volunteers each week.  But have you ever considered that your volunteer work could  get you into financial  trouble?  There are several areas of liability that can arise from volunteering from acts as a director or officer of a non-profit all the way down to minor clerical errors that could lead to personal liability risks for the volunteer.  Here I discusses a relatively new insurance coverage form that can be added to some homeowners insurance policies called volunteer wrongful acts insurance coverage.

Let’s start with a definition.  What is a wrongful act as defined by the volunteer wrongful acts coverage endorsement?  The endorsement defines this term as an actual or alleged error, misleading statement, act or omission, neglect or breach of duty committed by any insured during the policy period in the insured’s capacity as a volunteer.  If we break that definition down we see that the act must have occurred as the result of your volunteer work and that it can be either an alleged or an actual error.  It could even  be an omission or simply a breach of your duty as a volunteer.

I think an example is a good way to understand this risk and the insurance protection we are discussing.  Assume that you are a treasurer for a local nonprofit and you make an honest error in calculations that indicates that the nonprofit has more money to spend on a project than they actually have in the bank.  The project is approved based on your numbers and contracts are signed and the project gets underway.  Soon it is discovered that your error is going to generate huge expenses for your nonprofit due to the contracts that were signed for the project.  Suddenly you find yourself on the wrong side of a lawsuit with your nonprofit for the cost of these damages.  If you had added volunteer wrongful acts coverage to your homeowners insurance policy, then you would have protection for this loss. 

If this sounds like a coverage that you need, then you should contact your insurance agent and have them add it to your homeowners insurance policy.  Be sure that you understand the limits of coverage that can be provided.  Not every insurance company will allow this endorsement to be added to the policy and most will have limitations on how much protection you can buy.   So even though you may have a $300,000 personal liability limit on your homeowners insurance, this endorsement may limit you protection to $50,000 or perhaps $100,000.   You should also ask if your umbrella insurance policy will pick up coverage where this endorsement leaves off.  In most cases I have found that it will not do so.

Volunteering is a wonderful act of generosity and we should all encourage this kind of behavior as much as possible.  Unfortunately the law can still put you in a vulnerable position when you volunteer so you need to make sure that you have the protection you need to make sure that you are just giving your time and not your personal assets. At Clinard Insurance Group, in Winston Salem, NC we can help you add this protection to your homeowners insurance policy.  Please call us toll free, at 877-687-7557 or visit us online at www.ClinardInsurance.com.