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Teacher Organizations (PTO's)
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PTO INSURANCE - When? Where? How?...
Insurance for most people on a personal level is complicated enough. Trying to figure out the right coverage's and risks for a PTO Director can be even more confusing and risky. In addition, many new PTO Directors have no idea the personal risk they have assumed. Many new Directors comment "I had no idea I was personally liable for decisions I make, if money is stolen, or someone gets hurt."
At the Kreisman Agency, we represent the two largest insurance companies specializing in Parent Teacher Organizations (PTO's). We specialize in helping Arizona Parent Teacher Organizations evaluate their environments and understand which coverage's are necessary based on their exposure to risk. In addition, the Kreisman Agency offers a free no obligation personal Insurance review for each Director. Ensuring the PTO is covered is only half the equation. There is always the possibility that a law suit will seek additional personal damages from the Directors above the policy limits.
There are three types of Insurance's that all Parent Teacher Organizations MUST consider in order to protect itself and it's Directors. The discussion below provides a quick overview of the policies, coverage's and risks.
1. Commercial General Liability
This one is simple. If the school district informs your PTO that you are no longer covered under the District Liability policy, THIS IS A MUST.
In most cases, unless excluded, the Commercial General Liability policy will include liability coverage for: Bodily Injury, Property Damage, Personal Injury, Advertising Injury, Products, Host Liquor, Fire Legal, Child Abuse/Molestation, and many more.
There are many liabilities that are excluded and if available must be added as a optional coverage. For example, any activity that includes Liquor or Athletic/Sports must have the appropriate coverage added.
2. Property and Bonding Policy
This is the second most common area of risk. It covers borrowed property, Accounts Receivable, Important Papers, and lost or stolen PTO monies.
Question: Do we really need it?
Answer: This is an area where many PTO's run into trouble. They lack necessary policies, procedures and controls around Accounts Receivable and the depositing of monies.
Risks: If monies are lost, the PTO Directors could be personally held responsible for the loss by the PTO organization members. Imagine having a $10,000 fundraiser and your Treasurer takes the money home for the night, goes out to dinner, comes homes and finds out they were rob. IT HAPPENS!
Recommendation: The bottom line, if your PTO has a solid team of Directors and policies and procedures in place that address Account Receivable, deposits and signature authorization, you may not need this coverage. The exposure here lies in the fact that PTO Directors are liable in many cases for the lost monies.
Some items to consider when making the decision if coverage is required:
3. Directors and Omissions (D&O)
A Directors & Officers Liability policy provides third party liability insurance protection for covered losses resulting from an actual or alleged error or omission, misleading statement or breach of duty.
Question: Do we really need it?
Answer: These types of claims are not that common, but when they do occur, the financial loss to the PTO and personal assets of Directors, both past and present can be large. Therefore the premium price is usually double that of General Liability.
Risks: PTO Directors are personally liable for PTO actions (when, why, where, how, what, and how decisions made).
Recommendation: This coverage is really a judgment call. If you are a new PTO with new Directors, new committees, no solid policies or procedures, lots of on/off-site activities planned, and lots of advertising (newsletters, yearbooks, calendars,...), it may be the right decision as the risk would justify the cost.
Why Use the Kreisman Agency?
Answer: We have the experience, services and knowledge to help your PTO determine what coverage's are right for your PTO. In addition, the Kreisman Agency also offers a free personal insurance review for all Directors. Remember, even if you have all three policies, it is viable that a lawyer may come after your personal assets as well.
If you serve as a PTO Director, it is essential that your personal insurance coverage's are set appropriately. In 80% of all our reviews, our experience shows that Director families are underinsured and are unaware of the risk. For example, we find that most families that own a home with a pool do not have an umbrella policy and only carry $100,000 is liability coverage. When is the last time you heard of a drowning settling for $100,000. :-(Refer a Friend