Does a Release of Liability Agreement really count for anything?

Over on the I Am A homeschool Group Leader on Facebook,   Betty asked a great question:

 

Does a Release of Liability Agreement really count for anything? I see these all of the time; we had one last year as well, but with all of our insurance concerns this year I am beginning to wonder if they are valid at all. Will they hold up in court? Are they sufficient in lieu of insurance?

My reply:

The best information on using liability waivers I heard came from TJ Schmidt, an attorney with Home School Legal Defense Association (HSLDA). I heard him speak at a homeschool convention. He explained that waivers may deter people from suing you. A member may think twice about filing a lawsuit because he or she remembered  signing a liability waiver. That may be why insurance companies require waivers; they cut down on claims and lawsuits.

Liability waivers are NOT sufficient in lieu of insurance. Waivers will not pay damages or attorney fees if there is a claim or lawsuit. That’s what insurance does.

Liability waivers also show that your organization practices due diligence. It demonstrates that you run an organizations that values safety and protection, which might be helpful in a claim or lawsuit.

Carol Topp, CPA

Insurance quote?

Hi Carol,

Our homeschool group needs liability insurance so we can continue renting space from a church.

Do you give insurance quotes, or can you direct us to someone who can?

Thanks, Janet

Janet,

I’m an accountant, not an insurance agent, but I did write several blog posts on insurance for homeschool groups.

Read the blog posts here: http://homeschoolcpa.com/blog/insurance/

You’ll find a few agencies that write policies for homeschool groups as well as advice on reducing your risk in your co-op.

Read my article Insurance for Homeschool Groups as well.

You can find it on my website HomeschoolCPA.com under Leader Tools/Articles.
http://homeschoolcpa.com/leader-tools/articles/

Carol Topp, CPA

Insurance provider works with homeschool groups

Angela, a homeschool leaders in Arkansas, shared some helpful information about insurance for homeschool groups.

 

As our group grew and I began to understand the potential liability we, especially our leadership, was taking on and heard of more and more groups being sued, our board of directors decided it was imperative that we be insured.
Our search for insurance was very long, and discouraging.  We solicited quotes from companies and were completely turned down, or quoted prices that would have ruined our budget.   Then we found AIM!

Unfortunately, AIM Insurance no longer covers homeschool organizations.

 

Some homeschool leaders in Indiana and Ohio found that Mennonite Mutual Insurance is covering homeschool organizations.
 

And NCG Homeschool Solutions offers insurance to homeschool groups ad Classical Conversations Communities

 

Carol Topp, CPA

Do liability waivers really protect homeschool leaders?

I was recently asked about liability waivers from a homeschool leader:

As we draw up a liability waiver, do we need to have an attorney in our state look at it to make sure it is okay, or are they generally pretty generic forms? It seems those I have filled out in the past were basically the same, with just a few minor changes to make it appropriate for the group and/or event. Judy K. (Tennessee)

I wasn’t sure how to answer Judy, so I turned to Christine Field, an homeschool parent and attorney with Homeschool Legal Advantage:

You don’t think of homeschool groups as engaging in potentially dangerous activity, so the whole idea of waivers and liability insurance may seem unnecessary. Yet many groups are increasingly called upon to obtain liability insurance. The insurer may insist on your group having a release of liability form or a liability waiver.

Many people believe that a signed waiver makes them invulnerable. This is not true. Here are some common misconceptions about liability waivers:

1. If someone signs a waiver, they can’t sue us. This is not true. An injured party can still attack the validity and scope of a waiver.

2. If I have a waiver signed, I send it to the injured party’s lawyer and they won’t sue. Also not true. As a homeschool group, you still need to report the claim to your insurance company along with sending them a copy of the waiver to be used as part of your defense.

3. If I have waivers signed, I don’t need insurance. Definitely not true! In fact, if you have insurance, the insurer will often insist that you obtain waivers or releases from participants.
An enforceable waiver of liability is one which is prepared in accordance with state law, sufficiently describes the risk and is understood by the reader.

Some things to look out for in your releases are as follows:
1. Remember, minors generally cannot release liability. Parents or guardians must sign the release on behalf of the minor.

2. A release can only release from ordinary negligence. In other words, if there is gross negligence or intentional injury, the release will not be effective.

3. The language of the release must be in compliance with the state law and the signer must understand the language of the release. Look for language barriers or other inability to understand.

It is always good to have an attorney licensed in your state take a look at your liability waivers or releases. Doing so provides the best possible protection for your group as well as your directors.


Thank you, Christine, for your reply and insight into the best use of liability waivers for homeschool leaders.

Carol Topp, CPA

Do you need insurance on your officers?

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In my article, Insurance for Homeschol Groups , I discussed several types of insurance a homeschool organization might need. One type is called Director and Officers Insurance, or D&O insurance.

D&O insurance provides defense for leaders if they are sued for wrongful acts in their capacity as leaders. Typical lawsuits against a nonprofit organization include mismanagement of assets and improper employment practices such as discrimination, wrongful termination, and harassment. Many small homeschool organization find that D&O insurance can be very expensive and sometimes forgo purchasing a policy.

But could that be harmful to your organization or leaders?

Since writing that article, I have found an excellent explanation of D&O insurance for nonprofit organizations written by the Nonprofit Coordinating Committee of New York. You may read the entire article here.

Here is a helpful excerpt:

Unlike general liability insurance — which any organization that has a physical plant would be foolish not to have — many nonprofits are uncertain whether they need D&O coverage. When a person becomes a board member of a nonprofit organization, she assumes a level of responsibility for the organization (“duty of care”), and exposes herself to claims for not running and managing it in a proper way. Whether or not your organization needs D&O insurance depends on what the likelihood is that one of your board members will be the target of such a claim.

Claims generally fall into two categories: bodily injury (physical harm) and non-bodily injury (non-physical harm, like discrimination or termination). The majority of claims are for bodily injury. Your general liability insurance covers board members, subject to policy terms and conditions, for claims arising out of bodily injury and property damage.

Directors & Officers liability insurance only covers non-bodily injury claims. Non-bodily claims include employment-related claims and mismanagement of funds.

Fear of non-bodily injury lawsuits would be one reason to have D&O insurance. Although there are very few reported cases, it doesn’t mean that claims have not been filed and then either settled out of court or dropped.

Generally, there are two types of lawsuits in which a claim might be brought against a board member: derivative lawsuits and direct or third-party lawsuits.

Derivative lawsuits are claims against a board member on behalf of the corporation. The typical claim here would be mismanagement of assets. But, under New York State law only a few people have “standing” or the right to bring such claims. They are: 1) board member(s) suing other board member(s) 2) members of an organization suing a board (if at least 5% of the total membership join the lawsuit), and 3) the state Attorney General.

Because of these restrictive standing rules, very few derivative claims are ever made. It should be noted that claims of these types are not made for awards to an individual, but rather to make the corporation “whole.”

Direct or third-party lawsuits are brought by an employee or by a person not connected with the corporation who asserts a claim against it or its board on account of some non-bodily injury.

Employment practices like termination and discrimination are the largest exposure in these types of claims. If you have a small, friendly staff, and feel unlikely to have employment claims resulting in a lawsuit, you might not think it necessary to carry D&O insurance. However, when employees feel they have been wronged and are angry, they may file a claim even if it is baseless. At that point, you will have to hire lawyers. Your D&O then becomes a legal defense policy.

Indeed, Swords’ view is that D&O insurance is essentially legal defense insurance, noting that “99.99% of the cases brought against a board are going to be thrown out, but you’re still going to have to pay the legal fees if a claim is filed.”

In this connection, the “deep pocket” theory is relevant. This theory holds that only people with money are likely to be sued. Lawyers may file a suit based on a bogus claim against “deep pocket” board members with the hope of securing a settlement for their client. Organizations that have a board made up of “ordinary” people who aren’t known to have vast amounts of money may then be comfortable without D&O insurance.

I think their explanation of D&O insurance being “legal defense insurance” is very understandable. They also point out that most of the lawsuits filed against nonprofits are related to employees.  If your homeschool organization does not hire employees (and most do not), your risk is low and D&O insurance may not be necessary.

Carol Topp, CPA

Insurance for homeschool sports

Thanks to homeschool leader Kathi S from PA who told me about insurance for her homeschool group’s sports activities.

The Amateur Athletic Union (AAU) is one of the largest, non-profit, volunteer, sports organizations in the United States. A multi-sport organization, the AAU is dedicated exclusively to the promotion and development of amateur sports and physical fitness programs.

From their website page on insurance:

It can be extremely difficult and expensive to obtain insurance coverage for individual amateur athletic competitions. Yet if insurance is not obtained, the personal assets of the individuals conducting the event may be at risk. Many owners of sports facilities, especially municipalities and schools, will not permit the use of their property or facilities unless it can be demonstrated that both they and the entity/individuals conducting the event are covered under an insurance policy. Without insurance, the opportunity for amateur athletes to compete in organized sports programs is substantially limited.

Kathy’s homeschool organization pays only $12 a year for each student to participate in a volleyball club they offer.  That seems very affordable to me!

Read more here:http://www.aausports.org/Insurance/Overview.aspx

This may bring a lot of piece of mind to homeschool leaders running sports programs.

Carol Topp, CPA

Related article: Insurance for Hoemschool Groups

Is insurance needed for small homeschool groups?

Do small homeschool groups need insurance?

Often they do, especially of their host/landlord requires general liability insurance.

To help you discern your risk and need for insurance, Harvey Mechanic, an attorney that specializes in nonprofit law, lists some potential claim areas:

POTENTIAL CLAIM AREAS:

1. Discrimination (Age, Race, Sex)
2. Wrongful dismissal of employee
3. Mismanagement
4. Financial failure/bankruptcy
5. Poor administration resulting in losses
6. Causing the organization to incur unnecessary tax liability
7. Imprudent investments
8. Misuse of contributions
9. Conflict of interest
10. Unauthorized loans
11. Failure to obtain competitive bids
12. Unwarranted expansion
13. Failure to obtain government funding or lower interest loans
14. Misuse of government funds or grants

How many of these situations could occur in your homeschool organization? Probably some, but not all. Large nonprofits like the Red Cross or a hospital face many of these potential risks and need insurance.

In my article, “Insurance for Homeschool Groups,”  discuss the various types in insurance a homeschool group might need and how to lessen your risks to obtain a reasonably priced insurance policy.

Insurance for homeschool groups

Carol Topp, CPA

Planning a Homeschool Co-op

Faye, a homeschool mom and columnist for the DC Examiner.com, has a great list to help start a homeschool co-op (edited slightly for brevity):

Although it is wonderful to be able to plan lessons, activities and programs that best meet your child’s needs, sometimes banding together with other homeschoolers can be a huge blessing!  Planning a homeschool co-op is a large undertaking, but with some good people and a strong foundation, it can benefit you and your family in many ways. Whether you want to have a group for regular field trips, or you are looking for a way to provide some structured school time in a group setting, a homeschool co-op could be just the ticket.

If you are interested in starting your own homeschool co-op, I would like to offer some suggestions.

1.  Start with your homeschool support group and friends.  Who would be willing to help you get things started?  2-5 people is a good number for a planning group (more than that and it might seem impossible to find a time when everyone can meet!).

2.  Spend some time brainstorming about what the “ideal co-op” would be.  Would you meet once a week, or every morning?  Will the group be for just a certain age group (ie: only elementary-age)?   Do you want to offer set classes, with textbooks, tests, homework, etc?  Or perhaps something more relaxed, like clubs and projects?

3.  Once the group has ironed out a general idea of what the first year could look like, you will need to find a place to meet.  This may prove to be one of the most daunting tasks!  Try the local library or community center, a church or firehouse, or maybe even an empty business.

4.  After you have secured a space, it is time to invite homeschooling families to join you!  It can be tempting to hang up flyers and spread the word via homeschool yahoo groups and blogs.  However, a word of caution.  I have heard many, many stories about co-ops, and the one thing that resonates over and over again is the importance of having a group of like-minded people.  Now, that doesn’t mean that you all have to believe in the same things–far from it!  At our co-op, we enjoy having new points of view for the kids to consider.  However, if it is important that the co-op be Christian-based, that might not be a good match for someone who is agnostic.

5.  For your co-op to grow and thrive, people have to be willing to work together, to pitch in, and to get along.  It is an “army of volunteers”, and if the adults/kids don’t get along, the co-op will suffer and perhaps never get off the ground.

6.  Once you have a location and a few families have indicated interest–YEAH–you are in business!!  Meet with your planning group and decide what classes/clubs/projects you want to offer.  Some ideas to choose from:

  • Art/drawing
  • Science
  • History
  • Foreign language
  • Physical education

7.  Finalize which classes you will offer, decide on a start date, then work out registration details and fees.  If there is a fee to use your facility, all families will need to divide that expense. Many facilities will also want you to carry a separate insurance policy (for one local co-op, it is @$35.00/family/year.)

8.  Do an Internet search to find forms you may need/want to have (registration, emergency info, family info, student info, etc.)  The planning group can share these tasks so no one person feels burdened.

9.  Plan a park day for families to meet, get everyone registered, order your materials, and you’re on your way!

10.  You might also consider getting a website set-up exclusively for your co-op.  Homeschool-Life.com offers a low/no-cost website service for homeschoolers, and it allows you to have group registration, to use message boards, to provide event reminders, etc.

11.  Be sure that everyone who chooses to participate is willing to help with some aspect of the group, whether it is teaching a class, cleaning up, watching the little ones, or helping as needed.  “Many hands make work light” is certainly a true statement when it comes to a homeschool co-op!

12.  Resist the urge to “do everything” in your first year.  It will be tempting to do this, believe me!  Try to offer just a few things to the group (no more than four).  See how that works out, ask for feedback, and your group can grow from there.

It is a tremendous amount of work to get a co-op up and running, but the rewards cannot be overstated.  As the group grows and expands, your kids will have incredible opportunities for learning, friendships, and fun!  If you have experiences with, or suggestions for a homeschool co-op, please share them in the “comments” section below.  I am sure there are many good ideas right here in our own community!

 

Faye might be right that it is work to start a homeschool co-op, but there is help.  My book Homeschool Co-ops: How to Start Them, Run Them and Not Burn Out will walk you through the start up and  running your group.

Also my website www.HomeschoolCPA.com has many helpful articles on starting a group, getting a checking account and buying insurance.

You can do it! Just get some help from those who have gone before you!

Carol Topp, CPA

Three kinds of insurance for homeschool groups

030429_1897_5028_xsmsCarol,

We were told by our host church that we’ll need our own insurance policy.  Can you look into that for us?

Beth S, Ohio

(I am a volunteer parent in this homeschool organization)

This homeschool group had been told by the pastor of the church where they would start some homeschool classes twice a week that they their own insurance policy.

So they need their own insurance.  But what kind? In talking to a helpful insurance agent, I learned there are at least three types of insurance a homeschool group could possibly need:

General Liability (sometimes called fire insurance).  It covers the property an organization owns or rents.  This is what the church is wanting from our group in question.  They want an insurance policy if our group damages their property.  Someone suggested that we ask the church to add our group as a rider.  It might be cheaper.  Or, it was suggested, we should get “event” coverage. It might be cheaper since we don’t meet every day in the church.

Accidental Medical coverage.  This is for coverage if a child hurts him or herself while at our homeschool function.  Since we don’t have gym classes or physical activities I think my group will skip this type of insurance.  We’ll probably get the parents to acknowledge that they will cover their children’s medical expenses.

Director and Officer insurance: This is to protect the leaders from being personally sued for liability.  The agent said these policies start at $1,000/year.  Yikes!  He said it is because it includes provisions for employee s*xual harassment, etc.. Because of the expense to the organization, some non-profits board members carry their own liability insurance.  Personal liability insurance, sometimes called an umbrella policy, can be purchased separately.  Our group doesn’t have employees (or a very large budget) and so I think that we’ll forgo the D&O insurance, also.

Carol Topp, CPA

Director and Officer Insurance for homeschool groups

A support group leader in Alaska asks about Director and Officer (D&O) insurance.

Dear Carol,
I got to your website from an Old Schoolhouse article about insurance. (Read it here)

We are a support group in Alaska and we serve 90-120 families. We are trying to formalize our ministry partnership with the church and would love to see someone else’s model for a successful ministry partnership agreement. Do you have any thoughts or recommendations?

Also, 7 people on board this year and we would like D&O insurance. We are covered for liability on church’s policy, but not D&O at this point. I have talked with an attorney at HSLDA and because we are
1. a large group
2. high turnover (military community)
3. have at least once a month field trips
we think it is in our best interest to have D&O. I would love to hear your thoughts about other support groups getting D&O and if we should pursue it through the church or through another agent.
Thanks,
Kelly F in AK


Kelley,
I do not usually see a need for a typical homeschool group to need D&O insurance. I was interviewed by Home Education magazine about insurance for homeschool groups. You can read it here: HEM Interview with Carol Topp

Here’s what I said about D&O insurance:

*Director and Officer insurance: This is to protect the leaders from being personally sued for liability. Insurance agents have told me that these policies start at $1,000 per year. They explained it is expensive because of the litigious society that exists in America today. Also D&O policies cover litigation over employee issues such as sexual harassment, wrongful termination, etc. Most homeschool organizations do not have employees, so this type of insurance may not be necessary. However, I have known of potential board members that will not serve on a board without D&O liability insurance. They are usually high net worth individuals and are concerned about personal liability.

By all means purchase D&O insurance if you feel there is a risk that needs to be managed. In addition, I recommend that a homeschool group consider nonprofit incorporation as a means to offer liability protection for their leaders and officers. It is not the same as an insurance policy, but it does offer limited liability protection. Read this article I wrote to learn more about nonprofit incorporation.
Seven Great Reasons to Incorporate

I hope this helps!

Carol Topp, CPA