More and more PTOs are learning the importance of having insurance coverage for their activities. But do you know whether your policy will actually cover potential claims? Here are a few things to look for.

General liability policy: This policy should cover third-party bodily injury and property damage claims that occur during activities both on and off school property. “Third party” means non-participant, such as if someone who is walking by a magic show gets hurt by one of the tricks.

If you have an unusual or large event, such as a festival or fun run, make sure that the general liability policy covers all activities at the event. For example, if your school PTO is planning a fundraising festival that includes a ring toss, fortune-telling, magic shows, and an auction, check that the PTO’s liability policy covers any accidents or claims related to all these activities.

Excess accident medical: Excess accident medical insurance provides excess medical coverage to participants at PTO-sponsored events. If an injury at one of your events results in significant medical costs (such as surgery or a hospital stay), this policy will cover the costs that exceed the injured person’s primary insurance coverage. It is separate from general liability coverage, although it’s required that both be purchased together.

Directors and officers liability: This is a separate policy. It covers claims directed at an organization’s individual officers/board members resulting from decisions made on your group’s behalf. Make sure the policy’s definition of “insureds” covers all the different types of volunteer leaders your group uses.

For example, your PTO opts to work with a particular vendor and then they go out of business. Someone accuses the officers of knowing that something bad was going on with the company and decides to sue over it. (There does not necessarily have to be bodily injury or property damage for a D&O claim to be filed.)

Crime insurance: This covers claims related to theft or loss of your group’s funds. It generally applies to activities of a PTO’s treasurer and anyone else who handle funds. The policy should not name individuals. That way, you won’t have to worry if a different person starts handling the money during the period covered by the policy.

Property insurance: This protects property owned by the parent group, such as a cotton candy machine, fundraising merchandise, and computers, against theft and damage. Find out what the requirements are for the property to be covered; for example, stored in a locked space on school grounds.

Also, make sure to follow any financial controls and procedures required by the policy for coverage to be effective. For example, a policy might require an annual audit (financial review). It might also require that someone other than a check-signer authorize payments before being made. Although it’s hard to believe, theft of money from PTOs and other nonprofits is more common than you might think. One group discovered that its trusted volunteer treasurer embezzled $100,000 over several years.

Other Common Requirements

Most policies require that you notify the insurance company immediately when you have a claim or potential claim. If prompt notice is not given, the company may deny the claim, even if it would be covered otherwise.

In addition, some insurance policies require extra protections against losses, damages, or liabilities be included in contracts the group signs. For example, the insurance company might require that the vendors providing certain equipment, such as moon bounces or skating rinks, list the PTO as an additional insured party and that the vendors be liable for any damage or injuries directly resulting from the use of the equipment—rather than the PTO being liable. If these requirements (known as indemnification provisions) are not included in contracts, the insurer might not cover related claims.

Finally, you should have your own policy regardless, but it’s worth checking for coverage under the school’s policy, too.

For more information on parent group insurance available for PTOs and PTAs through PTO Today, go to ptotoday.com/insurance.

Originally posted in 2004 and updated regularly