Insurance
Acquiring Insurance is not a fun thing, especially if you start looking in the wrong places.
Why get it in the first place?
Even if your organization has so far operated without incident, how will you respond if some unfortunate worst-case scenario does occur?
If a guest or volunteer gets injured in your shop, but does not have health insurance, will you help them? If a guest is injured on their bicycle after leaving your shop, and sues the volunteer that helped them, can you protect that volunteer? If your organization is sued, will you be ready to hire a lawyer?
It’s not just the assets of your organization that are potentially at risk, but potentially the personal assets of your members or their loved ones could potentially be threatened (depending on organizational status, actions, insurance, etc).
In today’s litigious society, it’s impossible to completely prevent the possibility that an individual might choose to sue your organization, volunteers, employees, or board members. This is what insurance is for. In a world where people can get million dollar settlements over burned by a hot cup of coffee, it’s reasonable for your volunteers, employees, and board members to demand protection.
Most of the time things get settled outside of court to, among other reasons, avoid hitting the news. Local bike shops get sued all the time you just don't hear about it, and it isn't good idea for local bike shops to talk about settlement payouts. It either makes them or their products look unsafe, or gets people thinking they can make a quick buck by doing the same. If someone claims they have never heard of a shop getting sued, these are the reasons why it is kept quiet.
Even if you never are sued, there are good reasons to have insurance:
- Perhaps you want to recruit a prominent board member
- Perhaps the property owner you want to rent from requires it
- Perhaps you need it to use a public facility in your area
- Perhaps you need to get an operating permit from your city
General Approaches
The chances of finding an insurance company that is familiar with community bicycle organizations are slim, so finding insurance can be difficult. There are three basic approaches to purchasing general liability insurance for a bike collective. They have different restrictions depending on your organizational structure, and will provide different focuses to their coverage.
- Bicycle club insurance through the League of American Bicyclists
- Nonprofit organization insurance through a nonprofit broker or group buying plan
- Insurance aimed at (usually) for-profit organizations such as bike shops and trade schools
Types of Insurance
General Liability
Insurance against lawsuits for the organization. Sometimes includes retaining a lawyer. Cost of this type of insurance depends on particular activities covered and their associated risk. At least a million dollars in coverage. You should also consider using risk management such as Release of Liability Forms.
Board of Directors (or Directors and Officers) Insurance
If members of your board own things like trust funds, houses, or are married to people with those things they might become the target of a lawsuit against your organization. Directors and Officers are usually protected from the liability of their organization (that's why you incorporate, after all) but if you decide to get this type of insurance CPAs, Lawyers, and other useful professionals will feel safer being involved with your organization.
Injury or Accident Coverage
Do you want to be able to help guests, volunteers or others with medical expenses should an injury occur? If so, it might be helpful to have an insurance plan with the appropriate coverage. The LAB insurance plan has an option to cover medical expenses connected to group-sponsored rides, but no known plan specifically includes this type of coverage for collectives/co-ops.
Child Molestation Coverage
Does your organization work with kids? If so you need child molestation coverage. Sounds horrible, but the act of one rogue volunteer can sink your organization. This coverage also mandates that you do background checks on anyone that comes in contact with children in your organization.
Workers Compensation Insurance
Necessary if you have employees.
Business Owners Policy
A type of general liability package which might combine a number of the insurance types listed above, and possibly others such as auto insurance, insurance against theft or other crime, business interruption insurance, or other add-ons.
Insurance Providers
Pacific Reserve
Pacific Reserve has specialized plans for bike clubs, events and shops. Pacific Reserve has policies available to cover:
- General Liability - Board of Directors Insurance - Child Molestation Coverage - Workers Comp Insurance - Business Insurance - Event Insurance
League of American Bicyclists (LAB)
The League of American Bicyclists has a group insurance plan with American Specialty Insurance intended for bike clubs and bike advocacy organizations. This plan was originally designed to cover the risks involved in bike rides and bike clubs. Rates are based on your number of "members” and special event participants. Some bike co-ops/collectives have used this insurance, but at least one bike co-op has recently been told that this insurance is not appropriate for bike co-ops.
Types of Insurance Offered:
- General liability (primarily against the risks of lawsuit connected with crashes during group rides or special events).
- Participant accident insurance - can assist in paying injury costs
- Directors and officers insurance
- “Bike refurbishment” add-on - Unclear what this covers, but was told that this doesn’t cover bike co-op activities, in particular where non-employees are performing repairs
Requirements:
- League member
- Charge by number of members, or in the case of advocacy organizations “regular participants” in rides
- No worker’s compensation coverage available
- Generally doesn’t cover locations
- Organizations need not be incorporated or 501c3
Nonprofit Association Insurance
Nonprofit organizations tend to have varied and unusual risks which make it hard for them to get coverage from the usual insurance companies that serve businesses. For example, they might work with vulnerable people, use volunteers or have unusual programs. This can make insurance intended for nonprofits a good fit for bike collectives which have incorporated and have 501c3 status.
Assuming your organization is a non-profit, you have certain resources at your disposal. One such resource is the National Council of Nonprofit Associations which different state-level Nonprofit Associations belong too. Ask them who they would recommend.
Alliance of Nonprofits for Insurance
The Alliance of Nonprofits for Insurance, Risk Retention Group (ANI-RRG) is a 501(c)(3) tax-exempt nonprofit insurance company whose mission is to be a stable source of reasonably priced liability insurance for 501(c)(3) nonprofits.
McKay Insurance
In 1991, McKay Insurance Agency, Inc. was asked to design an insurance program for a large bicycle event. Since then our agency has established many successful programs for bicycle clubs, bicycle events and races throughout the United States and around the World.
Stanton and Associates
Stanton and Associates works insures non profits as well as Bicycle Manufacturers and Retailers.
Mainstream Insurance Aimed at Businesses
An alternative route is purchasing insurance primarily aimed at businesses, such as bike shops or trade schools. These policies could be purchased from one of the large national insurance companies such as Travelers or State Farm. You can inquire or obtain a quote by contacting one of these companies’ brokers directly, but you could have more luck by using a local independent insurance broker. With an independent insurance broker, you can discuss your particular risks and needs, and they can figure out how to express those needs in terms of an insurance package. For example, when our organization was looking for insurance, a local broker came up with quotes from a variety of companies with different focus areas.
Examples in the Wild
When you try and have a standard insurance carrier/agent quote a nonprofit organization, they have a hard time trying to classify the risk and usually come up with something that doesn't quite cover the needs or is so expensive that it is another way of saying "go away"
- Salt Lake City Bicycle Collective uses Susan Smith of Beehive Insurance which is licensed in all 50 states. According to Susan, who specializes in nonprofit insurance, she has access to markets that are strictly for non-profits that regular agents don't.
- The Bike House in Washington, D.C. has an insurance policy with Travelers Insurance that they purchased through Chenault Insurance, an independent broker in the area.
- "Velocity has a Business Property and Liability Policy through The Travelers Insurance Co. It's affordable and includes off site event coverage for
things like our Swap Meet." [1]
- The Inland Empire Biking Alliance: "We use NICA <https://www.insurancefornonprofits.org/> under our local advocacy. There are 3 co ops and the organization and cost is $1400 for $2million liability plus board od directors insurance. I believe the liability only runs around $650/yr"[2]