A two-part series by Todd Whiteman, Vice President Property Casualty / Nonprofit Insurance Specialist at Enscoe Long Insurance Group, LLC. Part 2 of this series will focus on insuring your hardware and software.
Fundamental Questions
There are two fundamental questions relating to insurance:
- What are my exposures?
- Am I covered?
In this article, we will focus on insurance exposures and coverage for two of the more popular electronic communications platforms utilized by nonprofits:
Electronic Communications – What are my exposures?
Nonprofits face more risks now than ever…thanks to technology. You probably acknowledge that technology is an extremely important tool in your organization, but do you know how to control it or how to protect your organization from misuses and abuses of it?
Legally, your actions and the actions of employees and volunteers, whether intentional or unintentional, can have major consequences. These issues include but are not limited to defamation of character, invasion of privacy, copyright infringement, etc. These exposures are not new, but website and social media communications are much easier to manipulate and have a wider range of publication than print.
A few questions you should ask of your organization:
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Do we have a social media policy for our employees and volunteers?
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Do we limit who can post and what can be posted to our website and third party sites?
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Do we have guidelines for posting other people's articles or logos on our website?
Electronic Communications – Am I Covered?
Now let’s go back to the fundamental insurance questions we noted at the beginning of this article. Let’s address the question of Am I Covered? up front, or before a claim arises. You may have coverage from the following avenues, but keep in mind no two insurance policies are alike!
- Directors & Officers, commonly referred to as D&O can provide coverage for personal injury (defamation of character) but may not provide for the mental anguish caused. Coverage can be provided for suits against the Organization, the Board and the Employees.
- Professional Liability / Errors & Omissions, commonly referred to as E&O, can also provide coverage to the Organization and Employees. This would be for a financial loss to a third party due to the actions or inactions of the organization and employees. Some policies provide limited coverage for the use of the internet and for your website, while some provide no coverage at all.
- General Liability is the standard liability coverage all organizations have. This policy provides coverage for Bodily Injury and Property Damage resulting from your operations. It can provide some limited coverage but will have a number of exclusions regarding the typical damages of a social media claim.
- Cyber Liability is a newer policy which some companies are now offering to properly cover the claims and scenarios we have seen over the last decade. This policy can be added as a separate policy or endorsed to your Professional Liability policy depending on the insurance carrier.
Keep in mind that there is also an exposure related to keeping your information secure through your website. Damages to third parties that are caused by a breach of your network or website security are typically not covered under General Liability policies and not under all Professional Liability policies either.
One last area often overlooked has to do with Public Relations. How is your organization going to deal with the bad publicity that might arise? It is worth noting that some carriers can offer coverage for Public Relations Expenses.
The most important thing to remember is that when a claim arises, many times the cost of defending the claim will be significantly more than the actual dollar amount demanded. Even a fraudulent or baseless claim can have significant defense costs. While you may have the best policies and procedures in place to prevent a claim, there is no way to completely avoid potential lawsuits.
Are You Covered?