How Insurance can Strengthen an Association

What is Association Liability Insurance and why does your club need it?

If you’re in charge of a local sporting club or special interest group, then you really should know about Association Liability Insurance. Like regular commercial enterprises, associations are exposed to the types of risks that can trigger legal action. An uninsured association could really be hit hard if they were required to pay legal fees and make compensation payments to a claimant.

Associations are established to support various causes or to allow people with the same common interest to pursue their passion. They normally fall into three categories – Sporting/Leisure clubs, Charities/Social Causes groups and Cultural/Performing Arts associations.

To be considered as an association, a group must have a minimum number of members. This will differ depending on the state or territory in which the association is incorporated. Directors and members do not make a profit from their involvement in their association. Any profits that an association makes are used to cover expenses and pay for future activities. For instance, an amateur theatre group would put the box office funds from their latest play towards costumes and props for their next production.

Although associations don’t operate for a profit, they still have a responsibility to act fairly, reasonably and responsibly both to their members and the general public. If the irresponsible actions of a club’s Director cause one of their members to sustain a financial loss, then the aggrieved member may have a claim for damages against the club.

Association Liability Insurance may offer cover if litigation results from the actions of a club’s Director or one of its members. Association Liability Insurance offers a range of coverage including Professional Indemnity, Tax Audit, Employment Practices, Office Bearer’s and Fidelity/Crime.

Who needs Association Liability Insurance?

Essentially every type of association in Australia should be covered with Association Liability Insurance. Here are just a few examples:

• Community sport groups
• Returned Services League (RSL) clubs
• Charities
• Hobby/Special Interest groups
• Amateur theatre groups
• Choirs
• Social Causes/Community groups
• Not-for-Profits
• Volunteer groups

What is covered under the BIA Association Liability Insurance policy?

A variety of different risks can lead an association’s Director, one of its members or an external party to sustain a financial loss. 

Association Liability Insurance with Berkley Insurance Australia offers cover for the following risks:

• Acts of discrimination within the workplace
• Fraud and dishonesty
• Contractual Liability
• Defamation
• Destroyed or damaged files and documents
• Penalties and fines
• Theft from a Director or member of an association
• Fraud and other dishonest acts
• Coverage for Insured Persons who are at the request of the association, a Director or Officer of an Outside Entity
• Breaches of Intellectual Property rights
• Misleading and deceptive conduct

Claims Examples

Here are some Association Liability claims that BIA has been involved with:

Example 1

A member of an association alleged that the Executive made defamatory remarks about her mishandling of the association’s funds. The member demanded compensation from the association and wanted the Executive to retract their comments.

BIA investigated the allegations and concluded that there were reasonable grounds on which to deny the member’s allegations. No further communication was received from the member and the case was finalised. The association’s legal expenses and investigation costs were covered by its Association Liability Insurance policy.

Example 2

In this case, the claimant had been hired to work as a consultant for the association earning $10,000 per month. The claimant’s role involved managing the overhaul of a complex. The claimant was terminated from the project and subsequently made a claim for breach of contract against the association. The claimant ultimately won his case and BIA paid the association’s combined costs of compensation and legal fees totalling $250K.

Association Liability Insurance with Berkley Insurance Australia

For more information on our Association Liability Insurance cover, contact us today.

Association Liability Insurance Fact Sheet

Association Liability Insurance – Policy Wording