Charitable Organization Liability Insurance Immunity
Charitable Organization Liability Insurance: I serve on the board of a local charitable organization. The board hired an attorney to advise the board on legal matters and he stated recently that we don’t need to worry too much about purchasing liability insurance because Texas law provides immunity to charitable organizations. Is this correct?
That’s an excellent question. We are privileged to serve several organizations such as yours and this question comes up frequently.
Your attorney is probably referring to the Charitable Immunity and Liability Act of 1987. The Texas Legislature passed this law in an attempt to reduce the liability exposure and insurance costs of charitable organizations. In addition, the law applies to the directors and officers that manage the organizations and the employees and volunteers that work for them, in order to encourage volunteer services and maximize the resources devoted to delivering those services.
The law applies to most types of charitable organizations, but you or your attorney should review the law carefully to determine if your organization is included.
This law sounds great in theory, but there are many “loopholes” and exceptions, and we don’t mean that in a good way as far as you are concerned. Here are a few reasons why you and your fellow board members should consider purchasing all kinds of liability insurance with high limits of liability.
- The law only limits recovery for bodily injury and property damage. It does not limit other potential claims, such as libel, slander or discrimination. The law does not apply to the duties or liabilities of a board member or an officer to the organization or its members. Nor does the law prohibit plaintiffs from filing suit; these suits still must be defended, and usually at great expense.
- The immunities and limits on liability do not apply to an act that is intentional, willfully or wantonly negligent, or done with conscious indifference or reckless disregard for the safety of others. Unfortunately, these points of law will be decided by the jury with help from the plaintiff's attorney.
- The liability of the organization and its employees is limited to $500,000 per person and $1 million per occurrence for bodily injury and $100,000 for property damage. The limitation applies only if the organization carries liability insurance for the amounts stated. The requirement can be satisfied with a combined single limit of $1,000,000.
- A volunteer is personally liable for damage or injury arising from the operation or use of a motor vehicle, to the extent insurance coverage is required by the Texas Motor Vehicle Safety Responsibility Act, and to the extent of any existing insurance coverage applicable to the act or omission. If your organization owns motor vehicles, the organization’s auto liability insurance may be the only protection available for a volunteer.
Bottom Line: Don’t be misled or distracted by the immunities and limitations provided by Texas law for charitable organizations and their directors, officers, employees and volunteers. Too many problems and exceptions limit the result intended by legislators when they passed the law. Yes, you still need all the liability coverage you can get, as much as you can afford.
Swingle, Collins & Associates specializes in Charitable Organization liability insurance - commercial and personal property and casualty insurance coverage in Dallas, Southlake, Highland Park, and Plano. The descriptions of coverage listed on this website are brief and subject to the provisions, limitations, and exclusions that can only be expressed in your policy and related endorsements. For additional information of how Swingle, Collins & Associates can assist in meeting your Charitable Organization liability insurance coverage needs for property and casualty insurance please contact your dedicated risk manager to discuss the benefits and services of personal homeowners insurance coverage.
The information contained on this page is provided for informational and educational purposes only. It contains general information on insurance issues and may not reflect the most current developments in insurance coverage and is unlikely to apply in all factual scenarios. The information does not include all the terms, coverage, exclusions, limitations or conditions that may be contained in the actual insurance contract language. The policies themselves must be read for those details. Sample policy forms will be made available upon reasonable request.