What kind of Insurance should an AIA Component consider?

Because the AIA Trust offers numerous varieties of insurance to AIA members as well as components, we frequently receive questions from AIA components about chapter-specific insurance – such as event cancellation insurance and liability insurance.  Since many components do not carry this kind of insurance, the market is not sufficient for the AIA Trust to offer an endorsed product.   However, your component may need one or more kinds of insurance and should consider them and pursue accordingly.

Directors and Officers Insurance & Fiduciary Liability Insurance

A nonprofit organization operated for the benefit of a group of persons may be sued due to alleged mismanagement. The fundamental responsibility of component directors & officers is to judiciously represent the interests of component members and other constituencies in directing the business and affairs of the component lawfully. Directors and Officers (D&O) Insurance coverage protects a component for the insured perils surrounding an allegation of a wrongful act. One important feature of a D&O insurance policy is defense costs coverage since they can easily escalate.

Directors and Officers (D&O) Insurance coverage is offered through Victor, which has also provided professional liability insurance underwritten by CNA Insurance to AIA members for over 60 years. In addition, Victor offers AIA Trust Business Owners coverage for components.

Business Owners Coverage

Components may want to investigate a business owner policy for their chapter. Business owner’s protection generally includes property and general liability, and riders can be added to include workers comp for component staff, business auto if used, umbrella liability, and even employment practices liability.

If you own a building, coverage should be for risks of direct physical loss on a replacement cost basis and business personal property to cover your office furnishings and equipment, improvements & betterments, and valuable documents should be included. Be sure your coinsurance clause indicates that you are carrying the proper amount of insurance for the premises designated in the policy.

As part of the AIA Trust program, Victor and CNA offer Business Owners Coverage to components (as well as architectural firm offices).

Event Cancellation Insurance

Generally, event cancellation insurance offers coverage for the loss of revenue or expenses due to cancellation, abandonment, curtailment, or rescheduling of a component event such as a conference. Coverage can include an array of causes ranging from weather to labor strikes to terrorism. Sometimes, it can also provide coverage for reduced attendance to a continued event that is not cancelled. ASAE has teamed up with AON to offer Showstoppers insurance.

Note: This has been a point of discussion among CACE as some do not find this insurance necessary or cost-effective.

Event Liability Coverage

Event Liability Coverage is generally more important for a component to carry than event cancellation insurance. While event cancellation insurance may be considered, it may be much less necessary than event liability coverage – so that a component is covered in case something happens at the meeting. Event liability insurance is usually only needed and purchased for the specific days of the meeting.

Fortunately, components with a business owners insurance policy generally have coverage that extends to whatever location where a meeting is being held, although sometimes you may be required to add the meeting location as an additional insured. Regarding liquor liability, your general liability coverage should automatically protect your organization for third party claims brought as a result of your serving alcoholic beverages – BUT this coverage specifically excludes claims if it is determined that you were in the business of manufacturing, distributing, selling, serving or furnishing alcoholic beverages. When your organization is operating a “cash bar”, you should consider purchasing specific liquor liability insurance and hire a food/beverage contractor, adding the component organization as an “Additional Insured” to the contractor’s liability coverage (including liquor liability).

If it is determined that you must purchase liquor liability coverage, the insurance company will need to know the number of people expected at the event, the time of the event and the anticipated liquor receipts. You will need to verify this through your agent with your policy as well as with your meeting Published by the AIA Trust, TheAIATrust.com 2 site.  Especially for components without an office, it may be best to find an agent in your state to purchase event liability insurance (which is not offered by Victor & CNA).

Individual Insurance Coverage for Component Executives and Staff

All of the insurance offerings for individual members may also be used for AIA Component Executives and Staff.  If you have any questions or need assistance, please email us at aiatrust@aia.org