Insurance Defense: Volunteer Liability

Have you ever seen a volunteer event go terribly wrong?

Imagine a summer block party put on by the neighborhood association, or the spring fling for a local charity. The weather is perfect. The turnout is outstanding. People are having a great time. Then, one guest starts having too much fun and one too many drinks leads to smashed up rental property and a big fist fight. Substantial damages ensue.

Officers and volunteers who help plan organizations’ events are often left to worry about personal liability when an event does not go quite as planned. 

Although personal insurance and that of the association may provide coverage for claims generated by such event, certain Maryland statutes protect volunteers from exposure so long as they acted responsibly and essentially limit the liability of some unincorporated associations, unless the damage resulted from gross misconduct.

The following statutes are included in the Courts and Judicial Proceedings Article of the Maryland Annotated Code:

Section 5-406:

This statute curbs the liability of the association itself and its agents personally, which would include you as the officer and organizer of the event that ended in disaster.  This statute limits the liability for the association to the extent of its insurance policy.  The association’s insurance must cover claims of at least $200,000 per individual and $500,000 total related to the same occurrence, or $750,000 per policy year and $500,000 caused by the same occurrence.  The policy deductible must be no more than $10,000.

Individuals, such as officers or volunteers, may have to compensate a vendor or renter who suffered the damages if the association’s insurance policy will not cover the amount of the damages.  The successful plaintiff must prove to the court that the individual acted “with malice or gross negligence” in order to recover damages beyond the association’s insurance coverage.  This proof must go well beyond mere thoughtlessness or carelessness.

This Maryland statute protects associations, such as athletic clubs, charitable organizations, civic leagues, community associations, co-op housing corporations, condominium councils and homeowners’ associations.

Section 5-407:

The protection provided by statute overlap somewhat with  Section 406 , but covers  business leagues, local employees’ associations, and labor, agricultural or horticultural organizations. Generally, this statute limits any personal liability to the extent of the individual’s personal insurance policy.

In some instances, a plaintiff can seek damages beyond the volunteer’s personal insurance coverage.  This is only the case if the volunteer knew or should have known about an act that would cause egregious damage.  That statute even applies actions that were purposely omitted, not just actions which were actually taken which may be the basis for the lawsuit.  Any person who participated in such an action or ratified that act or omission afterward is also subject to personal liability.  Again, the statute says that what the volunteer did or failed to do must satisfy the high standard of “gross negligence, reckless, willful, or wanton misconduct, or intentionally tortious conduct” in order to impose liability.

Section 6-406:

Finally, a plaintiff suing an unincorporated association may not bring all of its board members or officers into the lawsuit as defendants.  Under this statute, the association’s board members are protected because the association is sued as an entity.  In addition, individual volunteers cannot be named as defendants unless the claim is for specific personal liability, as discussed above.

Helpful as these statutes are, anyone taking on major responsibilities with an organization would be wise to first check their personal insurance coverage and any policy of the organization may have. The organization should also check with its insurance broker to ensure that coverage is provided for it and its directors, officers, employees, and volunteers.