New Member Orientation: Insurance & Risk Management

Basics for New Members

Risk Management = Sisterhood

Effective risk management is, at its core, a sisterhood issue. Looking out for one another and acting in each other’s best interests is part of what your fraternity/sorority is all about.

It’s no surprise, then, that the right “risk management” answer to a question is almost always also the right “sisterhood” answer to

a question.

HOW DO WE MANAGE RISK?

RISK

Eliminate It!

If you can eliminate a risk, you should attempt to do so; however, it is often difficult to completely eliminate risks.

Reduce/Minimize It

You can minimize risk with risk management policies (e.g. no alcohol in the chapter house, social planning guidelines, etc.)

Transfer It

The most popular way to transfer risk is by purchasing insurance coverage, which transfers the exposure to risk to the insurance

company, rather than your organization. Other means of transferring risk include requiring an entity to add you on as an

Additional Insured to their policy.

HOW DOES THE ORGANIZATION’S INSURANCE PROGRAM WORK?

Property Coverage

Liability Coverage

Automobile Liability

Coverage

PROPERTY COVERAGE

The property that the [Fraternity/Sorority] owns at the chapter

house.

The property coverage that the organization purchases covers the [Fraternity/Sorority’s] property, such as the furniture and kitchen equipment at the chapter house,

for example.

PROPERTY COVERAGE

A member’s personal property is NOT covered by the

fraternity/sorority’s insurance program.

Members need to rely on either their

parent’s homeowner’s insurance or a

personal tenant’s policy to protect their

personal property while living at the

chapter house.

LIABILITY COVERAGEThe liability insurance is third-party coverage, meaning that it protects the insureds (the Fraternity/Sorority, House Corporation, Chapter, Members, Volunteers, etc.) should they be named in a lawsuit from a third-party .

Let’s say you serve as the

Chapter President and

plan a party for your chapter.

At the party, a fight breaks out and

several people are injured.

The venue where the party was held, as well as the injured parties,

sue you, the [Sorority/Fraternity], the

chapter, and many others.

So long as you were following the rules and

policies of the [Sorority/Fraternity], you would be protected by

the organization’s insurance program.

Remember!Your [Fraternity/Sorority] has purchased the broadest coverage possible to protect you

should you be named in a lawsuit due to your affiliation with [Fraternity/Sorority name], so

long as you are following the guidelines of the organization. The liability insurance is third-party coverage, meaning that it protects the

insureds (the Fraternity/Sorority, House Corporation, Chapter, Members, Volunteers, etc.) should they be named in a lawsuit from

a third-party.

If you are injured at the chapter house or during a chapter event, you will need to rely on your own personal medical insurance in

case of an injury.

If you drive your personal automobile on [Fraternity/Sorority] business and are involved in

an accident, you will not be covered by the [Fraternity/Sorority’s] automobile liability policy. The [Fraternity/Sorority’s] automobile liability

policy exists to protect the organization if it is named in a lawsuit involving an automobile, not

individuals.

AUTOMOBILE LIABILITY COVERAGE

AUTOMOBILE LIABILITY COVERAGE

If you take your car to school, your/your parent’s automobile policy will continue to cover your personal automobile while you are away at school. If you do not take a car with you to

school, you will want to ensure that you are still listed as a driver under your/your parent’s automobile policy, if you plan to drive any automobile while away at school. Several

insurance companies offer “student away at school” discounts for this types of coverage, so

be sure to check with your insurance agent before you leave for college.

For more information about the organization’s automobile coverage, please refer to the Digging Deeper: Non-Owned Automobile <http://www.mjsorority.com> document on our

website.

WHAT DOES IT MEAN TO BE HELD LIABLE?

If you are found liable and

negligent, you may have to pay

monetary damages to

compensate for property damage

or destruction, physical injury, emotional pain, rehabilitation and/or legal expenses.

Responsible for some act or event that causes harm

or damage to another.

Can I be sued? Anyone can be

sued for anything at anytime. Even if

the suit is eventually thrown

out, you/the organization may still have to cover significant legal

fees and expenses. There are so many specifics that go

into answering that question that we

cannot confidently answer it either “yes” or “no.”

TRUE OR FALSE?

True False

A chapter member cannot be held for criminal activity due to her

participation in a fraternity/sorority event.

Explanation

•If a chapter member is accused of a criminal

activity (e.g. hazing is a felony in 48 states), their

affiliation with the fraternity/sorority will not

protect them from criminal prosecution.

True False

A chapter member is serving as the chapter’s “sober sis” for the evening, and she gets in an

accident in which two people are seriously injured. The

fraternity’s/sorority’s insurance policy will cover the chapter

member’s liability.

Explanation

•The liability in a car

accident follows the owner of the car. It would depend

on how the lawsuit was structured as to whether or not the fraternity/sorority would be brought into the

lawsuit. (

See the previous slides on the automobile liability

coverage.

True False

Three chapter members have a party at their off-campus

apartment. The fraternity/sorority cannot be held liable for any claims

that arise out of the party.

Explanation

•We often use the “duck analogy” when discussing official events - if it looks like a duck, walks like a duck, and acts like a duck, it’s a duck (i.e. if an event appears to be a fraternity/sorority event, it will be construed as a fraternity/sorority event). Basically, in

the event of a claim, you are leaving it up to a judge and jury to determine whether or not it was an official event.

Furthermore, if there is a claim involving injury, the fraternity/sorority is seen as having the “deepest pockets,” and

the claimant (and the claimant’s family and attorneys) will name the fraternity/sorority in the lawsuit if there is any possible way

to draw the organization into the claim.

Check www.mjsorority.com for claim examples.

True False

If I sign a contract on behalf of my chapter/organization that has

unfavorable contract language, I might be exposing my organization

to increased liability.

Explanation

•Contracts often have unfavorable

language that could put your fraternity/sorority at risk if a claim were to occur. For that reason, we recommend that you contact us

prior to signing any contracts with insurance language and/or

requirements.

For more information, check out the Contracts 101 e-module at

www.mjsorority.com.

Next Steps:

Discuss some recent events that your chapter has participated in and the various risk management concerns at each event.

Review the Insurance Summary available at www.mjsorority.com

Check out and bookmark the hundreds of resources available at www.mjsorority.com

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Contact us with any questions

www.mjsorority.com888.442.7470

©MJ Sorority, 2012. For use with permission only.