Re: Directors and Officers Insurance
Re: Directors and Officers Insurance
- Subject: Re: Directors and Officers Insurance
- From: Macbeth <email@hidden>
- Date: Tue, 10 Jun 2003 22:28:12 -0400
Our MUG has run for 16 years prior to now (we will celebrate the club's 18th
anniversary this August) without any insurance, incorporation or other
organizational planning per se. There have been efforts over the years but
financial and legal documents disappeared with a past president over 7-8 years
ago that were never recovered. That was before my time with the MUG so I can
only go by the story that has been passed down. Three years ago an attempt was
made by the leaders of the time to move beyond that, but the efforts fell to
the wayside with political and dictatorial wrangling. As a real casualty of
events that took place, I would wish that most MUGs could see value in their
"corporate" planning and documentation.
Bylaws had been standing still for more than 12 years, never approved/ratified
until two months ago. (Chuck!...it finally happened!!) This happened after a
concerted effort was made by the new leadership (of the last two annual
elections) to provide stable financial/legal responsibility on behalf of the
group. This included non-profit incorporation as of a year ago which would
result in protection for any who volunteered for officer positions according to
state rules, and the adoption of a newly developed revision of the bylaws with
separate standing rules and list of possible job descriptions. After suffering
through leader squabbles of the previous administration, it was felt that
having guiding principles in written form was a necessary undertaking that was,
by its very essence, required for the future viability of the group. We were
very thankful that the membership agreed and voted to ratify the proceedings!
As the MUG also maintains a community outreach program that refurbishes donated
items for placement where they are needed most, the club will also pursue
501.c3 status within federal statutes. This could not happen without
incorporation or bylaws/standing rules in place. It is hoped that it is
accomplished in the next year before current officers step down.
For the last two years we've had to provide liability insurace to meet the new
security measures of the school district where we meet for any events and to
cover accidents. But do not think it includes any bonding or liability for the
officers of the group. It costs the club approx. $200 per year.
From personal experience in working in other non-profit organizations (PTA), we
are required to have liability coverage for events, accidents and such, but as
a whole it is provided as an attachment rider with the school district that we
are affiliated with. Each Unit at each school is responsible for purchasing
coverage for any additional financial and legal requirements. Most just
purchase bonding coverage just beyond what their income per annum requires.
For a $10,000 policy it costs each unit around $80. It increases to $125 for
$25,000 bonding.
The only company that we have found to be willing to continue to work with
small non-profits at a reasonable cost is AIM out of Texas. This is the link
for PTA information but I don't see why MUG's with non-profit status couldn't
try to cut a deal with them that is comparable.
http://www.aim-companies.com/index.html
Many other insurance companies have increased their pricing beyond small
organizations needs due to the litigious nature of the population and from
increased levels of casualty losses from mismanagement or fraud. That is why
they can charge that $1500 that was mentioned! But for an organization that
may only have double that amount in annual "profit", that is a huge sum of it's
yearly budget. Quite a high price.
Each circumstance is different. I'm sure our MUG could have continued to run
as it was, but for the concerns of the leadership at hand. And those concern
all came from being embroilled in the casualties of the previous administrative
decisions. Fool me once, shame on you. Foolish twice, shame on me for not
preventing it happening the second time!
All individual MUGs can do is the best that they can, with what they have at
the time. Our club's current leadership thought this was an importanct step
that was required. Most of us had worked within other non-profit groups and
felt that there could be better future organization and planning so that the
MUG could see a future of celebrating additional years of service without too
many worries and political misdirections. That is the hope. I can't speak as
to how future leaders of our MUG will handle things, but the current officers
have worked to their best abilities to provide a foundation that is sound.
Macbeth
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