I think that we all agree that abusive behavior of any kind is unacceptable in your organization. But I think we all agree that Sexual Abuse cannot be tolerated under any circumstances. Regrettably, it’s something that happens all too often in a variety of situations.
It’s terrible to have to talk about this but unfortunately, we see a lot of these claims. It’s important that you understand the different ways your organization might have sexual abuse risk and how you can protect yourself.
Basically, there are two coverages that you may need to have in place. The first is Improper Sexual Conduct coverage (also known as Sex Abuse Coverage). The second is Employment Practices Liability coverage.
Improper Sexual Conduct Coverage
If needed, this coverage is usually added to your General Liability coverage. Organizations that work with youth, at-risk populations or the elderly should have this coverage in place.
Sex Abuse coverage for nonprofits protects your organization, its employees, and its volunteers from actual or alleged claims of sexual assault or misconduct. Typical claims involve improper touching and comments of a sexual nature between an employee or volunteer and a client. The client could be a child in a nursery school, a youth sports club member, a participant in a program for developmentally disabled people, an elderly shut-in receiving brown bag food, etc.
It’s important for you to evaluate your operations and whether or not there is any chance that anyone could ever be accused of sexual misconduct. The key word here is “accused.” We see many claims that are either false or unfounded. However, even in these cases, you would be forced to defend your organization and the individual employee or volunteer named in the lawsuit. The legal defense costs can add up quickly, but if you have Improper Sexual Conduct coverage in place, then your insurance company will tender a defense for you and pay your defense costs.
Employment Practices Liability Coverage
This coverage is usually added to your Directors & Officers Liability coverage. All organizations should include this coverage on their D&O policy.
Employment Practices Liability coverage for nonprofits protects your organization, its employees, and its volunteers against lawsuits associated with sexual harassment among other things. Typical claims include the use of inappropriate language (jokes, come-ons, etc.), sexual coercion, inappropriate touching, etc. These actions could be among employees, an employee to a volunteer (or vice versa), or an employee or volunteer to a third party. This coverage does not include inappropriate conduct to clients as that is addressed by Improper Sexual Conduct coverage.
Sexual harassment claims are prevalent both in the nonprofit sector and the for-profit sector. It’s vital to the overall protection of your organization and its board that you have Employment Practices Liability coverage in place. Note that this is true regardless of whether or not your organization has employees as the coverage includes protection for volunteers.
There are also claims in this arena that are false or ungrounded. Again, if you are faced with an ungrounded lawsuit, you will still have to defend your organization and the related parties. However, your Directors & Officers Liability policy will provide a defense and pay your defense costs.
No discussion about sexual misconduct of any type is complete without a word about risk management. As I often say, insurance is just part of the protection puzzle. Improper behavior can be mitigated by proper risk management. This includes standards, rules, procedures, corporate philosophies and more. We recommend that you discuss this topic with your board and your staff to determine what you can put in place in your organization to avoid these types of claims in the first place.
Volunteer Protection Laws
If you are not already convinced that you need to explore this subject and the coverage in greater detail then, consider the fact that the Volunteer Protection laws specifically exclude any claims that are sexual in nature. This means that in the face of the types of claims described above your board members and volunteers may not be protected by law from being held liable. This puts the people who are essential to your organization at great risk.