With three-legged races, popcorn machines, and more, most PTO volunteers see a carnival as a festive way to boost school spirit, raise some money, and, of course, have a little fun. But from where insurance providers sit, that same carnival looks more like a little shop of horrors.

The three-legged race? A chance for someone to get hurt, perhaps seriously. The popcorn machine? A fire hazard.

From the big endeavors like gifting playgrounds to the seemingly innocuous ones like allowing students to buy inexpensive gifts at a holiday shop, the experts see trouble. Someone could fall off one of those swings, choke on one of those gift items. They’re not being hysterical or alarmist. Those things—while infrequent—have happened.

PTOs and PTAs should be insured, not only to protect against injuries and damages at events that they sponsor but also to protect themselves against embezzlers. Even if the parent group itself is short on cash, someone filing a lawsuit may decide to name officers who seem to have more personal assets.

Many volunteers seem to take a head-in-the-sand approach, thinking, “Well, I’m a volunteer so I can’t be sued” or “We’re just a simple parent group. Who would embezzle from us?” The trouble is that anyone can be sued, and parent groups across the country have been victims of theft more times than we care to remember. Lawsuits require attorneys. Missing funds can be terribly difficult to replace.

And while many parent group leaders assume (or are told by a school administrator) that their group is covered by a school or district insurance policy, experts strongly recommend that parent leaders confirm that assumption before taking a large risk.

Plus Members get acess to insurance, discounts, expert advice, and more!

Do We Really Need Insurance?

Melissa Repetski, outgoing president of the Boyette Springs Elementary School PTA in Riverview, Florida, considers insurance “a must.”

“I’d be scared to hold an activity without it,” she says. Because the state PTA encourages local groups to take out insurance, the Boyette Springs group has a liability policy that costs about $300 a year and has bonded its president and treasurer at approximately an additional $100 a year. “With all the cases of embezzlement going around, I see the point,” Repetski says.

The fact is that anyone can sue anyone else at any time. While not all suits have merit, in this increasingly litigious time, a modest insurance investment can certainly lead to peace of mind and—if the worst case does happen—protection.

Because insurance is regulated by states and not by the federal government, the rules vary from state to state. In some states, for instance, school districts are specifically forbidden from covering PTO events under their insurance. In other states, the decision is left up to the school districts.

The best way to find out whether your parent organization is covered under the school’s policy is to ask the school district’s business manager. Be specific; if your group is covered by a school policy, ask what that includes—parent group meetings, family events such as carnivals, and so forth—and whether it applies to activities on or off school grounds.

Your best bet, though, is to ask for written confirmation of coverage from the district’s insurer. If you can’t get proof of coverage during good times, what will happen on that dark day when an accident happens?

Which Policies Should We Purchase?

Once your parent teacher organization has made the decision to purchase insurance, there are several things to look for to make sure your policies will actually cover potential claims. The PTO Today Plus insurance program, which has a particular focus on all types coverage for school parent-teacher groups, offers five different options.

General liability: This policy should cover third-party bodily injury and property damage claims that occur during activities both on and off school property that are sponsored by your parent group. “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, and all volunteers working 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. This helps avoid lawsuits that would be filed to get payment for out-of-pocket medical expenses if someone is injured. 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, and it’s truly an investment in the leaders of your group. These leaders who put in so much volunteer time are also exposing themselves to greater risk. Their decisions as leaders could be called into question in a lawsuit (“Why did you decide to use that vendor?”), and D&O insurance is designed to protect them in that case, 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 protects your group from embezzlement, 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. (Some insurance providers require the treasurer and/or president to be named individually each year, but blanket policies (such as that offered through PTO Today's insurance program) don’t require that.)

Property insurance: This protects property owned by the parent group, such as a cotton candy machine, fundraising merchandise, and computers, against damage or loss from theft or natural disaster. If that copier you purchase for your PTO is ruined in a flood or that $20,000 shipment of candy melts due to a refrigerator power outage, then your relatively inexpensive property coverage could come in handy. Find out what the requirements are for the property to be covered—for example, stored in a locked space on school grounds.

Other Common Requirements

Make sure to follow all financial controls and procedures required by the insurance provider 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.

Most policies require that you notify the insurance company immediately when you have a claim or potential claim. If prompt notice isn’t given, the company might 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 that the your group signs with third parties. 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” 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) aren’t included in contracts, the insurer might not cover related claims.

The PTO Today Advantage

Parent groups have a great option through the PTO Today Insurance program, which offers convenient packages created specifically for the kinds of activities that school parent groups do. PTO Today has partnered with a carrier that’s been rated A by A.M. Best, an independent, third-party organization that rates financial and insurance institutions.

It’s a compelling program and a wise investment. Insuring your group, your volunteers and your leaders means that you’re serious about your parent group work. Your volunteers—and especially your leaders—are putting their hearts and souls into your PTO, and they shouldn’t be faced with a personal liability should the worst occur. And a quick review of PTO news in recent years shows clearly that no group is immune from the dangers of theft or embezzlement.

Being a PTO or a PTA or any other kind of community group is no shield against a lawsuit or a loss. Insurance protection—especially at a group-discounted price—can make all the difference.

Download the info sheet for more information about PTO insurance.

Originally posted in 2001 and updated regularly.