Basic Insurance Coverage - CACip

What Basic Insurance Coverage Should a CAC Consider?

David Harbarger, CIC
Developer of the CAC insurance program

The blending of law enforcement, child protective services, prosecutors, mental / medical health and victim advocacy present significant challenges to the insurance industry.  You have probably experienced this firsthand with securing insurance coverage for your CAC.  The first consideration for any CAC should be to seek out an experienced insurance agent or broker that is familiar with the diverse “exposures” of a CAC organization.  CACs are different from commercial businesses and public agencies, and are best served by an insurance professional who appreciates those differences and has dedicated resources to helping CACs secure appropriate coverage that meets the organization’s needs.  Below is a brief description of primary insurance coverage that every CAC should consider in their protection of the CACs liabilities and assets.

 

Liability Insurance

General Liability – protects the CAC from claims arising due to negligence caused to a third party. Covered persons should include the entity, its employees and volunteers.  Protection from:

  • bodily injury
  • property damage
  • personal injury including libel, slander, defamation, or malicious prosecution
  • advertising injury including libel, slander, or copyright infringement due to advertising activities
  • medical payments with no-fault requirements for small medical injuries
  • host liquor liability for fund raising events

Coverage that is not typically found in the basic General Liability policy will require special attention.  Given the operations of a CAC and the circumstances of the clients, families and suspected offenders, the coverage below should be included:

  • sexual misconduct
  • physical abuse

Professional Liability – protects the CAC from negligent acts, errors / omissions or allegations from such activities as intervention, forensic interviews, therapy sessions, and the direction of care.  Coverage should also include the CAC involvement in the acts and decisions of the multi-disciplinary team.

All liability policies should provide a duty by the insurance company to secure legal protection for insured parties even if a claim is false or fraudulent.  CACs should require persons that supply services on their behalf, whether volunteer or contracted, to provide proof of coverage for their activities.

Property Insurance

Property – provide for the repair or replacement of their building(s), contents and  betterments / improvements to a leased/rented facility.  There are many different ways to insure the property value including actual cash value, agreed amount and replacement cost against varying degrees of perils known as basic form, broad form and special form.  Typically the most advantageous is to insure for replacement cost with a special form policy.  Take significant consideration into the value that it would cost to replace your building and contents with today’s construction costs and contents of similar function.   Another consideration is that a property policy provides the coverage at a specific location.  Property that you take away from this premise needs to be protected by a separate policy known as inland marine.

Business Income and Extra Expense – in the event that your property is damaged, there could be a significant amount of time that passes before the building or contents are repaired or replaced.  This event could cause a loss of revenue, terminations or lay-offs of employment due to lack of a facility to conduct operations, ongoing administrative obligations and necessitate the relocation to temporary location incurring extra expenses to maintain the CAC activities.  Business income and extra expense coverage can assist in mitigating these financial losses.

Business Auto

Automobile – provides coverage for the liability associated with the use of an owned or leased vehicle to the CAC.

  • liability – protection against injury and property damage to a third party
  • physical damage – protection for the damage caused to your vehicle
  • uninsured / underinsured motorist – protection for injury sustained by occupants of your vehicle against others that may not have any or enough liability coverage
  • medical payments – no-fault requirements for small medical injuries
  • non-owned liability – protection for the CAC from imposed liability of allowing a person, typically an employee or volunteer, to use their own vehicle for the conduct of CAC business

Rental Cars

  • hired liability – protection against injury and property damage to a third party while operating a rented vehicle
  • hired car physical damage – protection for the damage caused specifically to the rented vehicle

Safe Operators – care should be taken to only allow proven and mature (age 21 and older) drivers to use vehicles.  The review of an individual’s motor vehicle record (MVR) should be done before granting permission to use a CAC or personal vehicle.   Require any person using their vehicle for CAC purposes should maintain their own liability coverage with proof on file with the CAC.

Workers Compensation

Workers Compensation – provides medical and indemnity (wage and future earning capacity) benefits to an employee that is injured in the course of their employment.

Employer’s Liability – part of the workers compensation policy providing protection from the employer’s negligence contributing to the employee(s) accident or illness.

Directors’ & Officers’ Liability

Director’s & Officer’s (D&O) – protection of the CAC organization, its directors, officers, employees and volunteers for their decisions or non-decisions made in governing, managing and performance of duties as directed.   Wrongful acts can include allegations of breach of duty, errors and omissions, and other acts that cause harm to the organization.   Also, most organizational bylaws make a promise to indemnify its board members as a result of an action taken against them resulting in a financial loss suffered as a result of serving as a board member.  It is rare that an organization has the financial capacity to repay the defense costs and potential judgment against its board member(s) without the protection of a D&O policy.

Employment Practices Liability (EPL) – protection against employment related issues such as wrongful termination, discrimination, harassment, civil rights violations, ADA, etc.  Often, the EPL policy is combined with the D&O policy.

Umbrella Liability

Umbrella – provides additional liability coverage in excess of certain underlying or primary liability policies.  The primary liability policies have maximum limits in each claim and/or aggregate (sum of all claims).  An umbrella policy should provide excess coverage for:

  • general liability
  • automobile liability
  • employer’s liability

The above coverage is brief overview of the insurance coverage that every CAC should understand and consider as a protection mechanism for the operation and those associated with its operation.  Each of these topics should be discussed with your agent or broker to determine the necessity of each coverage, as well as other coverage that is particular to your CAC.