Non-Owned Automobile Liability is the most commonly misunderstood coverage in the Sorority Book of Business. Non-Owned Automobile Liability is designed to protect the organization for the risk of being named in a lawsuit involving an automobile. It does not protect individuals who are driving on behalf of the Sorority/Fraternity.

Non-Owned and Hired automobiles are automatically covered under the organization’s Automobile Liability policy. 

Hired Autos:  Autos you lease, hire, rent or borrow; except autos from your employees and members (for example, vehicles you rent from Avis, Hertz, etc.).  When you are renting an automobile on behalf of the organization, there is no need for you to purchase the physical damage coverage for the automobile from the rental car company.  Hired Automobile Physical Damage coverage is provided subject to the policy deductibles.

Non-owned Autos:  Autos you do not own, lease, hire, rent or borrow that are used in connection with your organization.  This includes autos owned by your employees and members but only while used in your organization.

Provides coverage for sums you legally must pay as damages because of bodily injury or property damage caused by an accident and resulting from the use of a covered auto. 

It is important to note that the Hired Automobile Physical Damage coverage extends to direct damage or theft of a rented automobile and operates for the benefit of the insured, which is the fraternity/sorority.  Automobile rental agreements, therefore, should always be executed in the name of the fraternity/sorority, rather than an individual’s name.

Any Named Insured using a non-owned or hired auto is an insured, except:

Non-Owned Automobile Liability coverage does not provide coverage for someone who is driving their personal automobile to or from Sorority/Fraternity events. This coverage is designed only to protect the organization, not the volunteer, member, officer, etc. who is driving their own vehicle on the organization’s behalf. Any volunteers, members, officers, etc. who choose to drive their personal automobiles on behalf of the organization need to rely on their own personal automobile coverage in case of an accident.

Individuals who use their own vehicles to drive to/from a sorority event must look to their own automobile insurance for protection should they be involved in an automobile accident.

The exposures associated with the Non-Owned Automobile Liability coverage are particularly concerning from a risk management perspective because of the vast number of personal automobiles that are driven to and from Sorority/Fraternity events at any given time that expose the organization to a Non-Owned Automobile Liability claim.

Further exacerbating the sheer exposure issue with non-owned autos is the number of members, volunteers and third-party individuals who only carry the state minimum automobile liability limits, which are woefully inadequate for accidents involving even minor injuries. For their own protection and fiduciary stability, we recommend that all volunteers and members of your organization carry at least a combined single limit of $300,000. Higher automobile liability limits are marginally more expensive than the state minimum limits, and the higher the limit, the less likely you are to suffer long-term financially consequences to an automobile accident.  

Even in situations in which the organization was not negligent in causing the accident, plaintiff attorney’s often use the “deep pocket” mentality when it comes to automobile accidents involving even minor injuries, meaning that the Sorority/Fraternity is seen as the “deep pocket” in the situation. Accordingly, in many of the examples listed below, the organization was brought into the lawsuit because they were seen as having more money and/or higher insurance limits to pay for the cost of lengthy litigation and judgment.

Over the last ten years, under the MJ Sorority Book of Business, the insurance company has paid out over $3.7M in automobile-related claims on behalf of our clients. With the potential for one accident (see examples below) to wipe out ten or more year’s worth of an organization’s Non-Owned Automobile Liability premium, the non-owned automobile exposure is quite disturbing.

Clearly the Non-Owned Automobile Liability exposure is an uncontrollable one, which is what makes it so concerning for our clients. The most important risk management tool in attempting to limit your Non-Owned Automobile Liability exposure is to encourage your members and volunteers to have a minimum combined single personal automobile liability limit of $300,000. In addition, we do not support designated driver programs that are not held in conjunction with an official sorority event (see this position paper on our website for more information). Finally, it is important that the chapter and sorority/fraternity leadership educate their members and volunteers as to how this coverage operates, so that they are aware of the exposure to their personal insurance coverage when they drive to/from any sorority/fraternity event or activity.

The following claim examples are real-life examples of how the Non-Owned/Hired Automobile Liability coverage responds when an incident occurs:

Example #1

Several chapter members were driving to a regional conference together in a member’s personal automobile. The vehicle swerved off the interstate in a single-vehicle accident, and one of the chapter member occupants was killed and another chapter member occupant was severely injured. The families of the killed and injured chapter members sued the driver and the Sorority for damages. The driver of the vehicle only carried the state minimum insurance limit of $25,000, which were quickly exhausted. The organization’s insurance policy settled with both families for a total of $740,000. The sorority was brought into this lawsuit because the driver’s limits were so low and the families of both women felt that someone (i.e. the Sorority) should pay for their loss. In addition, the Sorority’s policies stated that sisters driving vehicles in “official sorority capacity” were doing so as agents of the Sorority, which further hurt the Sorority’s defense.

Example #2

An officer was involved in an automobile accident in a rental car while attending a Leadership Conference. The officer failed to yield the right-of-way in traffic and struck another vehicle, injuring the two passengers in the other vehicle. The insurance company, on behalf of the organization, paid out $252,000 in settlement to the claimant and defense costs and $13,000 in property damages to the rental car company. The insurance company, on behalf of the organization, settled this claim because the officer was driving a rental car, and all cars rented for sorority purposes are covered under the insurance policy.

Example #3

A chapter advisor was driving a few members to the chapter house after a philanthropic event in her personal automobile. She ran a red light and severely injured two people riding on a motorcycle. The advisor’s personal automobile insurance limit was only $100,000, which was exhausted immediately. The total cost of the claim was $2,385,000. The insurance company settled this claim on behalf of the organization because of the deep pocket theory. In addition, the insurance company was unwilling to take the claim to court and risk the jury ruling in favor of two young people with severe injuries.

Example #4

A chapter member’s personal automobile was vandalized during the middle of the night in the chapter’s parking lot. The member’s personal automobile policy will need to pay for the repairs because the organization was not negligent in causing the damage, and the member had signed the housing agreement, which holds the organization harmless when personal property is damaged. The organization’s Non-Owned Automobile Liability does not cover property damage to individual’s personal automobiles.

Example #5

A “sober sis” program on a random Friday night led to a claim that cost the organization and the automobile driver’s family nearly $1M. For more information, check out our Position Paper on Sober Sis/Designated Driver programs. A chapter-sponsored “sober sis” program implies that the chapter will put in place proper safety guidelines and have some control over the transportation safety; however, the chapter has little control over an individual driving their personal vehicle and has even less control over the other drivers on the road.

Check out the Insurance Summary for more detailed information about your organization’s automobile policy, but the below graphic has the top three things to remember:

Here is a print-friendly PDF version.

We are seeing an increase in the number of riskier and more robust activities being proposed as chapter events and activities, such as the following:

Ropes courses                                                         Hay rides  
Mud/color/zombie runs                                          Rock climbing/Climbing walls
Skeet shooting                                                        Paintball
Trampoline events                                                   Slip-and-Slides
Haunted attractions                                                Mazes
Bounce Houses and Dunk Tanks                             Events over 500 people
Hamster balls                                                          Mechanical bulls
Eating activities/contests
Any type of inflatables

On their own, these activities are concerning because of the greater potential for injury due to the more physical and/or dangerous nature of these activities. With good risk management, some of the potential risks associated with these types of events can be mitigated; however, some of these events are inherently dangerous. If we continue to see more claims in these areas, the insurance company may be forced to take action by eliminating some of the coverage that our clients now enjoy. We would prefer that good risk management eliminate action from the insurance company.

In addition to the more physical nature of these activities from a risk management standpoint, we are seeing the contracts in these types of scenarios increasingly contain verbiage that is unfavorable for our clients. Examples of this are where the service/venue includes the requirement that the fraternity/sorority add the venue/service provider onto their policies as an additional insured, contractual verbiage that releases the venue from any and all liability, and the requirement that all chapter members and/or participants sign waivers or releases to eliminate the service/venue from liability. This trend toward more aggressive contractual language with these types of events is concerning for our clients primarily due to the fact that they have little or no control over the equipment and the facility that is being used by its members and to then release the service provider/venue from responsibility is not good business practice.

Thus as we see it you have an increase in the more risky activities, where the service provider/venue is completely “released” from any and all liability and we have the additional trends below to exacerbate the matter:

Please refer to your own organization’s policies regarding approved events.

Not all risky events are created equal; please refer to the table below for some specific examples:

As you can see from the examples above, there are ways to make seemingly risky activities more advantageous, primarily by holding the event:

If the event is held at another business, they will be primarily responsible for the liability to your members and their business insurance policy will be responding to any claims.

Refer to your inter/national Headquarters for your organization’s policies regarding approved events. Ultimately, it is up to the discretion of each inter/national Headquarters to determine whether or not to allow a specific type of event.

We recommend, when possible, that chapters find alternatives to the types of risky events listed and/or unfavorable contractual risk transfer.

If it is not feasible for you to find an alternate (and insured) venue for the event or to change the event altogether, we recommend that you utilize the services of MJ Insurance Sorority Department by contacting Ruth Akers, Senior Account Manager.

Should you have any questions or concerns, please contact Ruth Akers at ruth.akers@mjsorority.com.

Does this make sense for your House Corporation?

Pursuit of strong risk management will sometimes get in the way of solid business practices. A prime example of this is the reluctance of a house corporation board to have either collegiate chapter members and/or chapter advisors on the board. The fear being the threat this could pose of not “fire walling” liability away from the HC of the chapter operations.

In that the chapter operations and house corporation operations are equally and jointly insured under your organizations national insurance policy, this should be less of a concern for the liability.

We do believe that the increase in the communication between the two operations will be greatly enhanced which ultimately provides for a healthier relationship between the two entities.

One recommendation of helping to narrow this liability would be to have them as non-voting members of your local house corporation board and a minority in number.

The local house corporation is taxed at running the most optimum business for its resident members/other members and using available resources to do so makes sense.

We have had a few requests for sample wording to be used when a group or individual is using your organization name, crest and/or letters inappropriately. We have crafted the following language for your use in those situations. As always is the case in legal matters, we do recommend that you engage legal counsel in these types of situations.

In addition to a letter with the below or similar language, we also recommend that you include any back-up information, including pictures or other accounts of the misuse of the trademark, and any other corresponding documentation that reinforces your position.

Please do not hesitate to contact us with any questions or concerns.

It has come to our attention that your group and its members continue to misrepresent yourselves as members of [insert organization name and the specific nature of the misrepresentation].

This letter serves to inform you that you have made an unauthorized use of our copyrighted name and symbols in your operation. We demand that you immediately cease the use of such identification on your campus of any association with [insert organization name]. We demand that you desist from this or any other infringement of our rights in the future, referenced under the United States Patent and Trademark Office, which proves ownership or our name and the use of our associated symbols, including our Greek letters.

Take action quickly.

When the unexpected happens, report your claim right away to put yourself in the surest position—and best enable us to help. It’s not just smart practice; letting us know about a claim is your responsibility as an insured, so don’t get in the way of your recovery by skipping this important step.

Note: In most cases, Heather Cox is your first point of contact when you have a claim. But for an emergency, please call Cindy Stellhorn.

In the event of a claim:
Heather Cox
317-805-7598
heather.cox@mjsorority.com

Complete this form if you prefer to submit your claim online.

In an emergency:
Cindy Stellhorn
317-374-5039
cindy.stellhorn@mjsorority.com

Getting in touch with us won’t be the beginning and end of your response. Here’s a list of actions to take for various kinds of claims.

Download the Infographic

It is increasingly common for other organizations and/or people (third parties) to request some evidence that the fraternity/sorority or chapter has insurance coverage in place. The form that confirms that coverage is, in fact, in place is called a Certificate of Insurance, and it shows your limits and coverages.

We will need the following information from you in order to provide you with a Certificate of Liability Insurance:

Please provide all of the above information and any questions you may have by completing the Certificate/Event Request Form.

In addition, it is also very common for you to receive a request from a lendor requesting that you provide evidence that you carry property insurance. Banks often require you to list them as a Mortgagee or Loss Payee on your policy for property for which they provide a loan. Companies from whom you lease equipment, such as a copy machine vendor, also often request proof that you are carrying insurance to cover any damage to their equipment. This document is referred to as the Property Certificate of Insurance.

In order to process your Property Certificate request, please provide us with the following information by completing the Non-Event Specific Certificate of Insurance Form: