Understanding what Association Liability Insurance covers and why it matters?
If your community group or club is Incorporated, you might have heard about Association Liability Insurance but aren’t quite sure what it covers or why it’s important. Let’s break it down in simple terms and explain why this Insurance could be a must-have for your group and its leaders.
What is Association Liability Insurance?
Association Liability Insurance is designed to help your Incorporated Association as well as the people who run it. This can include your Directors, Committee Members, and Officers.
It may cover claims made against the Association or its leaders for things like:
- Actual or alleged mistakes (errors or omissions).
- Breaches of duty or responsibility.
- Acts that cause financial loss or damage to others.
In other words, if someone claims that your group or its leaders did something wrong while carrying out their duties, this Insurance may help cover legal costs and any compensation that might be payable.
Why is this Insurance important?
Many Officers and Committee Members don’t realise that by taking on their roles, they can also take on personal liabilities. This means they could be personally responsible if a claim is made against them for something they did (or didn’t do) in their official capacity.
That’s a lot of pressure for individuals who are simply trying to help their community!
Association Liability Insurance may provide peace of mind by helping protect both the Association and its Officers from financial loss arising from these claims. It allows your leaders to focus on delivering great outcomes, with less concern about their personal exposure to risk.
Who should consider Association Liability Insurance?
- Incorporated / Company Limited by Guarantee Community Groups and Clubs: If your group is legally Incorporated, this Insurance is highly recommended.
- Directors, Committee Members, and Officers: Anyone who holds a leadership or decision-making role in your Association.
- Volunteers in Official Roles: Sometimes Volunteers who take on official duties may also be covered.
If your group is unincorporated, this Insurance isn't necessary, but it’s always good to check with an Insurance expert along with your state’s related legislation.
How does it work?
If a claim is made against your Association or its Officers, the Insurance may help cover:
- Legal defence costs.
- Settlements or damages awarded.
- Investigation expenses.
This support can be crucial in protecting your group’s finances and reputation.
Why is it important for an Incorporated Body to understand legislative requirements?
Each Australian State and Territory has its own laws governing Incorporated Associations. These laws set out the duties and responsibilities of committee officials, which can vary from place to place.
As an Incorporated Body, you need to be aware of:
- Your statutory duty of care and due diligence obligations.
- The specific governance requirements in your State.
- The indemnity provisions available to officers under your State’s Associations legislation.
Understanding these helps ensure your officers act within the law and that your Insurance coverage aligns with these obligations.
Final thoughts
Running a community group or club is rewarding but comes with responsibilities. Association Liability Insurance is a smart way that can protect your group and its leaders from unexpected claims and personal liability.
If you’re part of an Incorporated Association, don’t leave your Officers and Committee Members exposed. Talk to Local Community Insurance Services today to find out how this Insurance may be able to help safeguard your group’s future.
The above statements are issued as a matter of information only and for full terms and conditions you should refer to the Policy Wording.
LCPA 25/902