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:
- The owner or anyone else from whom you hire or borrow a covered auto.
- Your employee – if the covered auto is owned by that employee or a member of his/her household.
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.
Excerpt from News & Notes
Year end 2017, the MJ Sorority Department was very pleased to see that we now have seventy-eight percent (78%) of our chapter houses under the additional protection of a fire suppression system. The leadership of the women’s fraternities and sororities are to be complemented on this attention to safety for their members and the preservation and protection of their property.
The goal of having a fire sprinkler system is twofold:
- To reduce significantly or entirely the risk of fatalities in a sorority chapter house due to fires
- To reduce significantly the ultimate property damage of the claim and disruption to your operations
Those chapter houses that are sprinklered were generally following the NFPA Code 13R, which required sprinklers except in the attic space. There was the assumption that there would be limited access to the attic space and the attic would be clear of storage and of any other use. The cost advantages of the NFPA 13R code over the prior code of NFPA 13 are substantial, ranging roughly 40-60 percent less. This is due to several reasons:
- Pipe material can be plastic instead of steel (product cost and installation costs)
- Attics do not have to be sprinklered if limited access and use
A trend has emerged with more fires occurring in the attic which has caused the property insurance underwriter some concern. Since there are no sprinklers in the attic, a fire that begins in the attic burns for a period of time undiscovered. It is only when the roofing is burned through and/or burns through the ceiling of the floor below that the building fire is detected. Valuable time has been lost where the fire department has not been notified as the sprinkler system goes off only after the fire burns through another area beyond the original origin site.
The fire results in more dollars loss per fire, it is harder to detect, it becomes larger in size and causes more widespread flame damage. Water damage also affects the dollar loss per fire since the fire is attached at the highest level by the fire department, affecting all of the floors below as opposed to a fire that is attacked on lower floors only.
We have considered how to address this exposure from a risk management stand point and offer up the two recommendations (applies to both sprinklered and non-sprinklered buildings):
Careful attention needs to be given to any electrical devices that may be operational in the attic, such as electric fans, humidifier, etc. Electrical malfunction is the leading cause of attic fires; three out of four of the largest fires in the MJ Sorority Department were due to electrical malfunction.
Any time that work is being done on these electrical devises, it is important to use contractors that have adequate insurance in case a claim occurs that arose out of their work on the item. Should the contractor cause the fire, then the insurance company would have recourse against the contractors own insurance coverage to pay for the damage to your property. See www.mjsorority.com for more details on this matter.
It would also be wise to pay particular attention to the attic space after the work has been done to ensure that the completed work appears to be functioning as intended.
- Install a heat detection/sensor or rate of rise detection/sensor, which is hooked up to your fire alarm system to give quick notice to the fire department of a fire in the attic and the occupants of the chapter house so they can evacuate. These devises can alert fire projection when the temperature in the area spikes up from a fire starting in the space. These sensors are relatively inexpensive and are connected to the fire alarm system. You need to contact your fire alarm system company to get more information of the additional risk management tool.
Tattletale is a portable alarm company that distributes important fire safety tools. Tattletale is also a business partner with Travelers Insurance, the property and liability insurance company for MJ Sorority clients, which enables MJ Sorority clients to have access to preferred pricing. These units are hooked up to the existing fire alarm system and are very reasonably priced.
Of our top four largest claims, three of the four started in an attic and the floors below were indeed sprinklered. As you can imagine when a fire occurs, the liability insurance company underwriter is very pleased that there has been no fatalities; however, the property insurance underwriter is less pleased because with an undetected attic fire, the cost of the ultimate loss is direct damage and loss of use claims are far more substantial than what they would have been if the attic had been sprinklered.
We urge you to review your system and if the attic is not sprinklered, make arrangements to get the rate to rise detectors/sensors installed.
As a property owner, the safety of your resident members is one of your biggest responsibilities, and we believe that these additional risk management recommendations will help you control your risks.
In the Event of a Claim
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.
- Property: First, do whatever is necessary to prevent further damage from occurring. Then call Heather with the date and description of your loss, and estimates for repair or replacement of your damaged items.
- Injuries to Employees: Within five days of the injury, fill out an Employer’s First Report of Injury Form and e-mail it to Heather.
- Injuries to Members or to the Public: Make no statements accepting blame, treat any potential or actual claim or lawsuit as a high priority item, and immediately notify your organization headquarters and MJ; contact Heather with names, date of loss, and details of incident.
- Embezzlement or Forgery: When you have reason to suspect financial foul play, your first step is to remove all financial responsibilities from the person in question. After you’ve done that, give us a call to discuss moving forward with a claim.
For Sorority Chapter Houses
Nearly every chapter facility is subject to severe winter weather. This is true not only of facilities located in Canada and the central and northern portions of the United States, but winter weather damage has occurred in areas as far south as Florida and Texas. Indeed, claim history indicates the areas that are most vulnerable to damage are the southern portions of the country because they are not accustomed to long periods of prolonged cold. For these reasons, it is important that every facility prepare in advance for the possibility of severe winter weather. The following checklist provides a starting point in developing a comprehensive plan to prevent unnecessary losses that can result from winter weather conditions.
| SPRINKLER SYSTEMS | YES | NO |
| Unattended areas inspected hourly or temperature monitored by central station? | ||
| Concealed spaces containing piping provided with adequate heat? | ||
| Building heat maintained at or above 55˚F for areas protected by wet pipe sprinklers? | ||
| Should pipes freeze, is a plan in place to prepare for thawing and pipe leakage? | ||
| In southern locations: are pipes insulated or is heat maintained in preparation for cold weather? | ||
| BUILDING FEATURES | YES | NO |
| Building heating systems repairs or annual maintenance scheduled before cold weather? | ||
| Heating equipment, combustion controls, and safety devices tested for proper operation? | ||
| Windows and doors in good repair and properly weather-sealed? | ||
| Gutters, downspouts, and roof drains are clear? | ||
| Roofs visually inspected for water ponding, structural deficiencies, etc.? | ||
| Areas subject to freezing provided with non-freeze type fire extinguishers? | ||
| Designated individuals authorized to initiate a winter weather alert? | ||
| List of equipment containing water that is to be drained before cold weather? | ||
| List of suppliers for portable boilers and/or heating units developed? | ||
| Designated individual/s to check that temperatures are maintained in the facility when it is closed or un-occupied? | ||
| Designated individual/s to leave faucets slightly open to let water flow to decrease possibility of the pipes freezing? | ||
| Procedure established for monitoring snow depth on roofs and snow removal action plan? | ||
| Are water-filled pipes located in exterior walls or unheated spaces properly insulated? | ||
| Have any pipes that are not required during the winter months been drained? (e.g. exterior hose lines) | ||
| Has any standing water in exterior valves been removed? | ||
| Are hydrants kept free of snow, ice, and other debris for easy access by the local fire department? | ||
| Are trees inspected to remove broken or dead branches? | ||
| BOILER EQUIPMENT | YES | NO |
| Is water flow maintained through process cooling lines and cooling towers to help prevent freeze-up and possible damage? | ||
| Have any pipes, valves, and pumps that are not required during the winter months been drained? | ||
| LIST OTHER FEATURES UNIQUE TO YOUR FACILITY | YES | NO |
*Any box checked “no” indicates a need for correction action.
Essential measures to minimize the risk of a freeze or water damage loss
- Keep furnace on and thermostat set at or above 68 degrees
- Make sure all hoses are removed from exterior water spigots/faucets
- Drain water lines in lawn sprinkler system where appropriate
- Inspect windows and repair all broken glass
- Place additional insulation on exterior walls and windows
- Insulate exterior doors appropriately, and assure all close and latch completely
- Attach and secure downspouts with extension from foundation, not draining onto the driveway, sidewalks, or patios and fully displace water from walking areas
During periods of extreme colder temperatures
- Open the indoor faucets slightly to allow water to trickle as moving water does not freeze as easily
- Leave the doors to cabinets that contain water lines open, this will allow heat to enter the area and help prevent freeze
- If the power goes out, note the time of the outage and have a plan to keep perishable food cold. Potentially hazardous foods, including meat, dairy, eggs, and cooked vegetables need to be stored at or below 41 degrees Fahrenheit.
- e a plan in place if you are without power and heat for extended amount of time
Additional safety measures during colder months
- Clear all necessary snow and ice from sidewalks, fire escapes, and walkways which may result in a slip and fall hazard
- Use fireplace, wood stoves, or other combustion heaters only if they are properly vented to the outside. Exercise caution when heating with these devices, as well as propane appliances, and older wall or floor gas furnaces.
- Never use a charcoal or gas grill indoors—the fumes are deadly.
- Check that you have a working carbon monoxide detector.
- Keep as much heat as possible inside your property. Check the temperature in your home often during severely cold weather.
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:
- Fraternity/Sorority and Greek Chapter Name
- Date of the event
- Type of event (i.e. Philanthropic, Social, Chapter-Oriented, etc.)
- Whether or not alcohol is being served (if alcohol is being served, who is serving the alcohol?)
- Name and address of the venue and/or individual requesting the Certificate of Insurance
- The contact information and preferred contact method (i.e. e-mail, fax, etc.) for the individual to whom the Certificate should be sent
- If the venue is requesting Additional Insured status, please forward the contract immediately to us for review.
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:
- Name and address of the entity/individual requesting the Property Certificate
- Any written documentation, such as a contract, that stipulates your obligation to provide the entity/individual with proof of insurance
- Loan number, if applicable
- E-mail address of the entity/individual requesting the Property Certificate
Engaging in a building or renovation project is an exciting, albeit stressful, endeavor. In addition to the hundreds of decisions regarding design, budget, decorating, and other items, there are insurance and risk management concerns to consider in order to protect the House Corporation and the organization from loss.
In an effort to simplify at least the insurance portion of the building process, we have developed a glossary of sorts to help you familiarize yourself with the associated terminology, as well as our recommended limits when applicable.
General Liability
General liability covers physical and bodily damage for which the general contractor and its employees would be held liable as a result of completed operations or product liability. We recommend that any independent contractors carry a minimum of $1M per occurrence in general liability limits.
Workers’ Compensation
Workers’ compensation is insurance paid by companies to provide benefits to employees who become ill or injured on the job. We recommend that independent contractors carry a minimum of $500,000 per accident.
Automobile Liability
Automobile liability insurance protects the insured against financial loss because of legal liability for automobile-related injuries to others or damage to others’ property by an auto. We recommend that independent contractors carry a minimum of $1M per occurrence in automobile liability limits.
Builders’ Risk
A builders’ risk policy is a property insurance policy that is designed to cover property in the course of construction. Coverage typically applies not only to property at the construction site, but also to property in transit or at off-site storage locations. We use the estimated completed value of the project as the builders’ risk limit.
We recommend that you have an MJ Client Executive review contracts associated with any building projects prior to signing them. We also recommend that the Fraternity/Sorority, House Corporation, Chapter, etc. be indemnified in the contract language from any loss or damage caused by the independent contractor/s. Because of the complexity of these types of issues, we recommend that you engage the services of a local attorney familiar with your local laws and statutes in the contract negotiations.