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Liability Insurance -- umbrella company?

Is there an umbrella company that offers liability insurance to choral groups?
Jean Cottel
WCS, Eugene OR.
Replies (16): Threaded | Chronological
on January 17, 2015 5:36am
Hi Jean.  We get ours through State Farm.  Costs about $500/year.  This is a CGL policy, not D & O.
David Spitko, Artistic Director
The Choristers
on January 17, 2015 8:14am
Thanks David. Is The Choristers a community choir?
on January 17, 2015 8:01am
Jean, I spent a few years as a liability underwriter and did quite a lot of work with nonprofits. So here is the first statement I offer every time this issue comes up on ChoralNet. Your choir absolutely needs both CGL/umbrella coverage and D&O. You just have to have them. I would not even consider serving on a board without them. They are not the same, and you need them both.
In my experience - and it's been over ten years since I was in the business - the best products out there for nonprofit organizations are Chubb, Cincinnati Insurance Company, and First Nonprofit Insurance Company. As with all their products, Chubb is by far the best, but also usually the most expensive. David mentions State Farm, and I don't know their policies specifically, but they generally align with the standard ISO forms. The problem, of course, with State Farm agents is that they can only sell you State Farm. So they have one product available and that's that.
Here's what to look for in your CGL/umbrella coverage. This is the coverage that protects you from suits brought by direct, physical injury.
  • Worldwide coverage territory, including suits brought anywhere. Particularly important if you tour internationally.
  • Duty to defend (not just defense coverage), and defense costs outside the limit of liability.
  • MOST IMPORTANT: No participant exclusion. Many insurance companies don't have separate rating charts worked up for community choir (or whatever), so they use the closest match they can find. This is often "Theater companies, traveling" or "Theater companies, NOC." The problem with these classifications is that they often include a carve out for participants. So an audience member trips on a power cord: covered. But one of your choir members falls off the risers: no coverage! If underwriters are clear on what you're doing - just singing, not climbing ladders, hanging lights, building sets, etc. - they are generally willing to classify your operation such that this exclusion will not be in there.
If your agent offers you a policy meeting these terms, from an A+ or higher rated carrier on admitted paper (Don't start dealing with surplus lines.), you're good to go.
on January 17, 2015 1:05pm
Tom, thank you SO much. This is really helpful. We have been foolishly operating without it for a long long time.
Jean in Eugene.
on January 18, 2015 6:26am
Hey Tom.  Thanks so much for answering.  I have seen you respond to liability questions before and what you write is always so valuable.  A question for you.  We are an advanced auditioned community concert choir in the northwestern suburbs of Philadelphia.  About 50K/year in revenue/expenses.  About two years ago, a corporate litigator on my Board and myself (I am also an attorney - employment law representing employers) analyzed whether we needed D & O (which costed out to about $1K/year - Chubb and State Farm were about the same in terms of $).  The two of us concluded we did not.  Because we legally have no W-2 employees, all of the potential liabbility that we could conceive of is covered by the CGL policy.  So, we operate without D & O insurance.  I am curious as to your reaction to this.
on January 24, 2015 8:36am
Hi, David. You're certainly correct that the vast majority of claims that successfully pierce the non-profit shield are employment-related ones. And $1M of coverage for about $1,000 per year is about standard for a small nonprofit. Now, the CGL provides coverage only for claims arising out of direct, accidental loss. Somebody gets injured or something gets broken. D&O, on the other hand, protects against the unintended consequences of an intentional act or decision made by the board or the corporation. I sometimes used to call it dumb decision insurance.
So first of all, keep in mind that a corporation need not have W2 employees to have suits in the employment practice space. It's an auditioned choir, meaning that people are sometimes turned away from participation (theoretically... I mean, not tenors...). Additionally, the meetings of the choir (rehearsals, basically) involve different people and different personalities. The board is responsible for assuring the peaceful comfort of all participants, and a member of the choir feeling harassed by another member has access to the same "hostile environment" remedies as would an employee. Finally, claims against an board alleging a breach of its fiduciary duty to the organization will not necessarily pierce the shield and reach the board members personally, but the organization could certainly go bankrupt trying to defend itself.
Specific example claims in each of these:
1. I wasn't chosen for participation in the choir because I am... (Fill in the blank... Black, gay, Norwegian...). This organization hired the music director, who is clearly bigoted, and now I have suffered as a result of this poor decision.
2. That creepy baritone consistently harasses me on the way back to the car after every rehearsal. The board of the choir has known about it for months and has done nothing to stop it. (Let's not even discuss the examples in this category with any high-school-aged members of your choir...).
3. The board approved hiring a professional flautist to play on this concert. But I, a choir member, a, also a flautist and would have played for free. The board is squandering the choir's money and breaching its fiduciary duty. (Yes, this was an actual case....)
Remember that you don't have to be guilty for a suit to bankrupt the organization. Our legal system offers little deterrence for those bringing frivolous law suits. When I my client was sued under example number three, the cost of having that case thrown out of court was just a bit under $40,000. And that's was a case that was thrown out the first time it was brought in front of the judge. Cases that go to trial almost immediately cost well into six digits to win....
on January 25, 2015 6:18am
Thank you very much Tom.  Your thoughts and specific examples are very helpful.  I am fully aware of the absurd cost of litigation.  I am a defense employment attorney.  The discussion of the cost of defense of an obviously frivilous lawsuit is one that I have with my clients from time to time.  When myself and the corporate litigator on my Board thought about whether D & O insurance was needed when considering the cost, we recognized examples like #1 and #2, but decided the balance of the cost (around $1,000) and the likelihood of this actually occurring won in favor of the cost.  Had not thought of #3.  Amazing.  We will revisit the issue of D & O insurance to have another discussion to see if we still arrive upon the same conclusion.  Again, thank you.
David Spitko, Artistic Director
The Choristers
on January 18, 2015 11:32am
I had this come up when I was music directing at a church in Eugene, and I seem to remember that the musician's union local had some options. 
on January 18, 2015 12:52pm
Thanks SO much! That's a possibility we had never thought of.
Jean in Eugene.
on January 20, 2015 2:35am
This probably won't help you in OR, but just in case there are any Australians reading this with the same question, they should immediately join the Australian National Choral Association and access their blanket policy
on January 24, 2015 6:41am
Jean: We are shopping insurance as we just received a notice of non-renewal (our agent no longer represents the company). Something that was pointed out to me by Amis, I company that I called after locating them online, is that some policies will not cover anyone under 18 years of age. This is something to consider if you have children associated with the organization.
on January 25, 2015 6:19am
Do you mean a CGL policy or a D & O policy?
on January 26, 2015 8:04pm
This was a liability policy. I've spoken to another agent & he didn't think the age was an issue but he was going to look into it when investigating various policies for us.
on January 27, 2015 4:10am
Yeah ... does not sound right. 
on January 25, 2015 9:09am
Thanks Patricia: Good to know. We are a bunch of old broads, but one season we did let a mother-daughter team sing with us, by request. The daughter was 14. Our director okayed it, but we never thought about insurance as part of the issue. I think we won't do that again. We also give scholarships to Vocal Performance students at the university and they come and sing with us. I suppose a freshman could be 17.
We have a flautist, but we always make her play. :>))
I am so glad I started this thread. I have learned so much and gotten so much good information. Thanks everyone.
Jean in Eugene
on January 25, 2015 12:10pm
I'm glad you did, as well, Jean!  I have a relatively new, no-audition community choir in Houston - reading this makes me realize that the combination of rapid growth, public exposure on the web and lack of protection, is probably a very bad idea.  Going to be calling one of those insurance companies tomorrow.  
Barb in Houston
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