We have seen an increase in the number of requests from the collegiate chapters to participate in the concession area for an athletic event at the sports stadiums.The requests generally come about because the company managing the concessions wants the group to show evidence of insurance; thus a request to us for a Certificate of Insurance. From an underwriting standpoint, we have some concerns about this exposure and will work with each request to minimize the ultimate liability to your organization. Below are some specific guidelines:

Fortunately we are finding that the concession management firms will work with the participating chapter and will enlist their assistance for areas other than the alcohol sales of an event.

We bring this to your attention not only to point out a trend of increased requests, but also to inform you of several recent lawsuits, which supports our underwriting position on this fundraising activity.

If the person selling the alcohol was an employee of the beverage provider, then the litigation trail and liability stops there. However, if the individual who dispersed the alcohol was involved in an organization like a sorority, then there exists a very strong probability that that organization would be brought in to the lawsuit (see here and here for examples). Hence, our fear about the ultimate liability of not only the local chapter, but also the national organization would be at risk.

We encourage you to communicate these risk management guidelines within your organization to ensure that each activity being considered is addressing the many different risk exposures.

Should you have any questions or concerns on the above information, feel free to contact your Client Executive.

One of the more challenging exposures of writing a women’s fraternity or sorority is keeping the insurance and risk management recommendations “contemporary” to the changing dynamics of a campus women’s organization. As the size of the chapter increase in membership numbers, more and more sorority sisters are gravitating to alternate housing where several of them may live together. On those campuses where sorority chapter houses are not as common and/or a sorority does not physically have a chapter house, it has been common for some of the sorority sisters to secure housing together.

Irrespective of the reason, the number of “living arrangements” outside of a traditional chapter house is increasing and are being referred to and/or being considered by the campus community as the “X Sorority” chapter house. We refer to these locations as unofficial houses.

These unofficial houses pose a number of problems to the national organizations and, ultimately, to the insurance
coverage. The concerns include the following:

We have seen a significant increase in claims that are coming from those locations that are not the actual chapter house, but instead from these unofficial houses. We have identified this concern to your national leadership. We also know that, as a volunteer, you are more apt to be aware of the existence of these types of housing arrangements. Should you have one of these types of arrangements on your campus, we would ask that you bring it to the attention of your leadership. Upon their review, we have encouraged them to involve us, if needed, in addressing the housing situation specifically.

[See this article from Fraternal Law titled “Dormant Chapter Houses” for additional information]

Here’s the scenario: a Chapter Advisor calls us and explains that several chapter members have come to her concerned about a fellow chapter member who is exhibiting signs of a severe eating disorder. The Chapter Advisor asks us what to do to avoid any allegations of infringing on the chapter member’s privacy. We receive calls similar in nature to the fictionalized scenario above at least once a week. The individual calling typically sites concerns of violating the Family Educational Rights & Privacy Act (FERPA), a federal law that protects the privacy of student education records. Although the legislation originally passed in 1974, FERPA has received increased attention more recently following the tragic events at Virginia Tech and the shootings in Arizona. There are a few key facts about FERPA that are especially important for our clients’ leaders and volunteers to keep in mind:

We encourage you to familiarize yourself with your organization’s risk management policies and procedures when a member’s health is at risk. The leaders of your organizations have gone to great lengths to equip you with the resources and tools to know how to handle these types of situations. In emergency situations, we also encourage you to contact the appropriate University officials. Most campuses have trained individuals on staff that deal with emergency situations day-in and day-out.

In 1996, NPC adopted a unanimous resolution regarding peer monitoring.  The resolution states that member groups should refrain from serving as Panhellenic and Greek enforcement officials at social events and that the NPC expects its member groups to resist pressure from university personnel for their members to serve as social event peer monitors.

The resolution was adopted due to concerns that the monitors were not trained and that monitoring imposes a duty of enforcement that cannot be met, which creates a duty where heretofore none existed, therefore imposing negligence on participating groups and the fact that the universities are not indemnifying the monitors for his liability.  There was also some concern about the possibility of one group’s member retaliating against another group for some prior allegation of rule breaking.  NPC’s legal counsel and insurance carrier have advised against peer monitoring.

Since the adoption of this resolution, many universities have attempted to persuade NPC groups to participate in peer monitoring or party checking.  Recently, a question was posted on the AFA listserve regarding peer monitoring and party checking.  Interestingly enough, Mitch Crane, an attorney and member of Sigma Phi Epsilon Fraternity, posted the following response, which goes hand-in-hand with NPC’s resolution:

In most cases, monitors were lax under fear that their own chapters would be sanctioned in return if they enforced the rules.  On two cases, men were threatened physically.  There certainly are some institutions where this type of monitoring appears to be effective – but it takes mature and brave men and women to do it.

Another issue I have raised is the fact that in almost all cases the party monitors are not covered by liability insurance – this puts liability on the individuals and/or the uninsured councils.  In the few cases where the councils and the party monitors are on the institutional liability policy, there is a great exposure to suit if the monitors do not do their jobs properly or if they come and go and an incident occurs later in the evening.

Purely from the point of view of enforcing policy and also protecting oneself from suit, any monitoring of parties should be by the campus police or by another law enforcement agency and not by undergraduates of fraternity and sorority advisors.

We certainly support an organization’s responsibility to hold their own members accountable for appropriate behavior.  To that point, we are in complete agreement that monitoring of social activities outside of one’s own organization should be done by an insured third-party.  You should continue to decline any university request for participation in peer monitoring or party checking activities.

What has emerged since that time is a “modification” of the actions expected under a peer monitoring system.  This comes in the recognition of the flaws of the prior system and an acknowledgement that a modified system, now being labeled “peer observing” could be appropriate within the Greek community. In several recent situations, university professionals were not looking for this to be a group to group enforcement practice, but simply an expectation that each group is responsible for its own self-governance or its own monitoring of the activities.

In that the term “Peer Monitoring” has taken on several different meanings, it may be wise to create a new term which draws from the goal of this practice, which we believe to be that each group is accountable for the actions of its members.

As such, we are inclined to consider this practice differently and would be supportive of a “refreshed” look at the practice and the potential for embracing a new policy on how to achieve the accountability that is being sought of the member groups.

As conditions change, it is important to take another look at how exposures are evolving and the “reform” initiative discussion should effectively accomplish this for our clients.  We wanted to share the risk management and insurance perspective to assist your leadership in tackling this critical challenge.

We understand that this is a difficult issue to tackle, and we want to help you determine how best to manage this exposure. Should you have any further questions, please do not hesitate to contact us.

We are often asked about the worthiness of using liability waivers by our clients. In the past, under the advice of legal counsel, we have taken a somewhat ambivalent attitude toward encouraging our clients to have their members sign waivers or requiring that non-members participating in chapter events sign waivers as we were concerned that the waivers wouldn’t stand up in court.

However, over the past several years, there has been a shift in case law that has caused us to reconsider our position on waivers and releases. This, coupled with the dramatic increase in liability incidents and claims among our clients, has caused us to re-evaluate our position. Our research and the advice of legal counsel now indicates that participant waivers/releases may be advantageous for our clients in two ways prior even to the test of court:

We are now encouraging our clients to utilize participant waivers (both for their own members and for events sponsored by the Fraternity/Sorority with non-member participants) for the following types of events:

We have developed a participant waiver/release template for our clients’ use. Please be sure to read through the waiver in its entirety and make necessary edits so that the waiver applies to your specific event. You will see examples and further information in the footnotes of the waiver/release template.

Once the appropriate waiver has been drafted by included the requested information in the template form, waivers may be distributed in paper or electronic format. If distributed and collected as hard – copies, chapters should either keep the paper copies or scan and save as an electronic file in accordance with your organization’s document retention policy. It’s important that chapters not go to all of the effort of collecting signed waivers to simply dispose of them the day after the event as claims often come much later than that.

A potentially better option is to use a web-based liability waiver platform that will help your chapters create and distribute waivers to participants and then save signed waivers in a searchable database. There are a few websites that offer this. One such company that we recommend is SmartWaiver as we believe that the waiver creation and distribution process is relatively seamless and pricing is reasonable and upfront.

For additional information, please refer to the article published in Fraternal Law (link). Should you have any questions or concerns, please contact Estacia Brandenburg, JD, MJ Sorority Client Executive.

Two members attended a semi-formal event in which alcohol was served by a third-party vendor. Both members were over 21 and reportedly had been drinking at the event. It is believed that they were walking home from the party and became disoriented and lost. One member tripped and fell as she walked into the street. The other member tried to help her up, when they were both struck by a car. One member was killed and the other member sustained serious injuries.

At this point, no charges have been filed against the sorority; however, the statute of limitations in the state in question has yet to expire.

Issues to address:

It is very common for third parties to request a Certificate of Insurance that proves the fraternity/sorority or chapter has purchased insurance coverage.  This request can be satisfied by obtaining a Certificate of Insurance that shows your limits and coverages.  When a third party asks for evidence of your insurance, you need to complete the Certificate of Insurance Request Form in the appendix of this document or complete the Certificate of Insurance Request Form on our website.

Is there a contract that you have to sign that contains insurance and indemnification requirements?

If yes, do not sign the contract until you have contacted Ruth Akers at MJ Insurance. If you sign the contract, you may unknowingly be obligated your organization to unfavorable liability and/or indemnification requirements that could put your organization in jeopardy.

If you are unsure if the contract contains insurance requirements, look for the following verbiage examples:

While these examples are the most frequently used phrases that cause us concern from an insurance standpoint, contract language is often complicated, so it is always better to be safe and send the contract to Ruth Akers for review.

If a third-party is requiring Additional Insured status, they are looking to your organization’s policy to defend them and pay claims on their behalf, even if they are negligent in causing a claim. 

Additional Insured requests relating to social events are heavily scrutinized; therefore, it is important that you allow two weeks to allow for the necessary parties to review.

Request a Certificate of Insurance via this form on our website.

The below suggestions are recommendations only, not requirements.  The information below should be kept on file for your records.  We do not need copies of this information.

Please refer to your organization’s risk management policies for specific conditions required by your fraternity/sorority.

When you rent an establishment or engage the services of someone, it is recommended that you obtain a Certificate of Insurance to ensure they have purchased insurance for their operation.  If the third-party vendor does not have insurance, then the fraternity’s/sorority’s policy may have to respond, which is not preferable.  Your agreement with a third party vendor will dictate what coverages should be represented on the Certificate of Insurance.  For example:

As a guideline, the following limits of liability are a minimum that you should accept from a third- party:

We have established the above minimum recommendations for the following reasons:

A red flag should arise any time a contractor or venue shows resistance to or hesitation with these minimum limits of insurance, and you may want to reconsider your arrangement. In our experience, if a contractor or venue refuses to provide proof of adequate insurance limits, it is because they do not have any insurance, not because they do not have adequate limits.

Any time a chapter contracts with a venue, contractor or any third-party for services, it should be clear that each party is responsible for the consequences of their performance and/or work and the conditions under which the service will be rendered. This contractual relationship exists so those who are in the best position to control the exposure are also the most likely to incur the liability for those incidents that may occur. In an ideal world, each party’s insurance policies would respond to the extent that they are negligent in causing either property damage or bodily injury. The essence of this risk management technique is to transfer the liability to the entity/individual the most able to control the exposure. Establishing a minimum expectation is a reasonable effort to ensure that this transfer happens and that you are doing business with a professional and reputable entity or individual.

Does MJ Insurance approve events?

No, MJ Insurance offers recommendations based on prudent risk management.  Your National Organization has the ultimate decision as to the approval of your event. It is important that you review the rules and policies of your national organization before you begin the event planning process.

I have a Certificate of Insurance that I received for an event we had last month. Can I use it again for an event that is being held next week?

No, Certificates of Insurance are all issued on an event specific basis; therefore, each time someone requests a Certificate of Insurance from you, you must obtain another Certificate of Insurance. Furthermore, the venue/third-party requesting the Certificate of Insurance will want to be sure that their name is listed as a Certificate Holder on the Certificate of Insurance, which is another reason why Certificates are issued on an event specific basis.

I have an Insurance Overview that shows we have coverage. Can I use it when I am asked for a Certificate of Insurance?

No, the Insurance Overview contains specific and confidential information regarding your chapter and should not be shared with anyone outside your organization.

How long does it take to process a Certificate of Insurance?

It depends on what exactly is required by the specific venue and the nature of the event. We recommend that you submit requests two weeks in advance in order to ensure timely delivery, but we are happy to help you with Certificate requests at any time. Completing the Certificate of Insurance Request Form in its entirety is the best way of ensuring timely processing of your Certificate request.

We are renting a venue that will be serving alcohol. Is evidence of their state liquor license sufficient?

Each state has very strict guidelines for businesses who are licensed to sell alcohol, and we certainly recommend that you only use businesses that have a current liquor license. However, it is equally if not more important, that you require evidence of the business’ liquor liability insurance coverage, which is separate coverage from general liability insurance and will have a separate limit of liability. For much more information on this issue, please refer to our position paper.

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:

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.