Expert: Harvey Mechanic - 5/14/2008

Question
My husband and I are recently elected officers of our local Home School organization.  One of the main issues that we're facing is the question of liability.  We own no property of our own.  When we rent a facility, such as a church, for one of our events, what liabitlies do we incur as an organization (not as individual officers), if damage or injury were to occur while we occupied the facility?  The basic question is whether or not it would be prudent to spend approximately $1300/year to cover potential accidents with a general liability policy if our total assets only amount to about $5000?

Answer
Usually churches and other organizations, who would rent to your 501(c)(3) organization, themselves maintain general liability coverage and that would cover for slip and falls and other such problems that happen on their premises, even if they have rented particular space.  You may want to review their insurance policies.  In any case, I do not think that your exposure is great enough to spend $1300 per year as your organization probably does not even have employees and would not have the following type of exposures that larger nonprofit organizations might have:

POTENTIAL CLAIM AREAS:

   1. Discrimination (Age, Race, Sex)
   2. Wrongful dismissal of employee
   3. Mismanagement
   4. Financial failure/bankruptcy
   5. Poor administration resulting in losses
   6. Causing the organization to incur unnecessary tax liability
   7. Imprudent investments
   8. Misuse of contributions
   9. Conflict of interest
  10. Unauthorized loans
  11. Failure to obtain competitive bids
  12. Unwarranted expansion
  13. Failure to obtain government funding or lower interest loans
  14. Misuse of government funds or grants

POTENTIAL CLAIMANTS:

   1. Rejected job applicants
   2. Disgruntled employees
   3. Disapproved prospective members
   4. Creditors
   5. Members
   6. Residents
   7. Patients
   8. Consumers
   9. Donors
  10. Government agencies
  11. Third parties

You will normally have quite a bit of protection against lawsuits
as well. Taking your job seriously and practicing good governance
is, of course, the strongest protection. There is also a federal
Volunteer Protection Act. In addition, most states protect
volunteers and the risk of legal liability
should be quite low if the organization is run well.

Harvey Mechanic
Attorney At Law
Harvey108@hotmail.com