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 and are defined as follows:

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

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: