Any organisation that provides services to clients or the public should have some form(s) of liability insurance in place.
This is because the organisation could be held liable for injuries or losses someone experiences due to its actions, errors or negligence.
What liability insurance covers
In a successful claim, liability insurance covers compensation to the wronged party and their legal costs, plus the insured’s costs in defending the claim. So as you might imagine, without the financial protection of insurance, a lawsuit can end up being very expensive!
There are however certain types of events are unlikely to be covered by a policy. This includes extreme sports, high-risk outdoor activities, and sexual abuse by a known perpetrator. Our previous article provides more detail on this.
Churches and charities face many types of liability risk. We will explain some of these and provide some scenarios indicating which types of insurance policies might apply.
Types of liability risk for churches and charities
- Public liability: personal injury, property damage, or advertising injury (e.g. slander, libel, or copyright infringement) experienced by third parties due to the organisation’s actions or negligence.
- Professional indemnity: harm resulting from personal services such as counselling and pastoral care.
- Management liability: losses or harm resulting from misleading statements, breaches of trust, or errors by directors, officers, or employees.
- Crime liability: losses due to criminal acts – e.g. theft of property by an employee, credit card fraud, or robbery of the premises.
- Cyber liability: harm to third parties due to electronic crime, such as exposure of their confidential information.
The above risks can be covered through various types of liability insurance policies. See below for examples.
Liability scenarios and insurance coverage
1. Slips, trips and falls:
Event: A visitor to your faith centre trips over boxes left in a part of the lobby which is normally a walk-through area. The person suffers a serious leg injury and is unable to work for several months, and sues for loss of earnings.
Insurance types: General Liability (Public & Products), or Umbrella Liability.
2. Credit card losses:
Event: a person claims their credit card details were stolen while they were paying for books at your centre and that this led to their card being used fraudulently.
Insurance types: Management Liability – Crime coverage.
3. Harm resulting from counselling:
Event: a client undergoes counselling sessions and claims some private details of their case were shared with others.
Insurance types: Professional Indemnity.
4. Data theft:
Event: online attackers steal some of your data that contains private information about a business you deal with and the business owner sues for damages.
Insurance types: Cyber risk cover.
5. Employee dismissal:
Event: an employee claims to have been wrongfully terminated by the organisation and brings a lawsuit for financial losses and pain and suffering.
Insurance types: Management Liability, or Professional Indemnity.
Need more info?
To check your cover or discuss your policy, get in contact with our office.
You can also find many more ‘insurance explained’ articles by CCI here.
Written by Tess
Tags: insurance, liability, risk management