TrustTalk — Q & A

“Trust Talk” is a periodic feature of the Risky Business newsletter that provides Trust Members with answers to some commonly asked coverage questions.  If you have a question you would like to submit for possible inclusion in future a TrustTalk article, email them to

Q:  Members are requiring third parties to purchase Tenant User Liability Insurance Policies (TULIP) when permission is granted to an outside group, whether private or non-profit, to use its facilities for events.  How does TULIP respond when liquor is involved in their event?

A: There are two kinds of liability coverage when alcohol is involved in an event: Host Liquor Liability and Liquor Liability. 

Host Liquor Liability provides coverage against bodily injury or property damage suits brought by parties injured as a result of an intoxicated guest who was served alcohol at an event hosted by the insured.  Host Liquor Liability, normally provided in a general liability policy at no additional cost to the insured, covers tenant users who are providing liquor, at no cost, during their event.  Host Liquor Liability coverage is automatically included in the TULIP policy so when completing the online application, tenant users should select “No” to the question “Do you require liquor liability coverage?” as they are already covered. 

Liquor Liability provides coverage for bodily injury or property damage for which businesses or individuals become liable as a result of contributing to a person’s intoxication.  Liquor Liability covers tenant users who are furnishing alcoholic beverages for a charge.  This includes fundraising type events that include alcohol in the price of the ticket.  The TULIP policy does not cover Liquor Liability.  As such, the tenant user would need to purchase liquor liability coverage and should therefore answer “Yes” to the question “Do you require liquor liability coverage?”

Q: Does my school district’s insurance coverage through The Trust extend to our PTO/PTA groups?

A: Although the work done by parent-teacher organizations and associations (PTOs/PTAs) is for the betterment of the school district, they are considered a separate legal entity and are therefore ineligible for coverage under the school district’s Liability Policy with The Trust.

“We find that many parent groups simply assume they are covered under the school’s policy which is not the case,” explained Colleen Bodziony, Trust Director of Membership Services.  Whether they are formally organized through the Secretary of State’s office or not, these parent groups operate independently from the school district and subsequently need to secure their own insurance protection, said Colleen.

Additionally, many PTO members seem to think “Well, I’m a volunteer so I can’t be sued” or “We’re just a simple parent group, who would sue us”.  The fact is that anyone can sue anyone at any time, and while not all suits have merit, in these increasingly litigious times, a modest insurance investment can certainly lead to peace of mind and the needed protection should a suit be filed. 

In fact, PTO/PTA organizations structured simply as unincorporated associations may be opening members to personal liability.  “Under Rhode Island law, unincorporated associations may be sued by naming the officers of the association or the members if there are no officers,” explained Ian Ridlon, The Trust’s General Counsel & Director of Legal Services.  “This can result in individual liability for members of such associations.”

Because membership in The Trust is limited by State statute and The Trust’s By-Laws to only local governmental entities or organizations that are an instrumentality of a city or town, PTO/PTA organizations do not qualify, and The Trust is unable to offer them separate coverage.

Q: Are our employees and volunteers who use their own personal vehicles while undertaking town/school/special purpose district business covered under our insurance policy with The Trust?

A: The Trust does not provide primary insurance coverage to Member employees or volunteers who use their personal vehicles for business purposes.  Primary Trust coverage is only available when employees or volunteers are using vehicles and equipment which are owned or leased by a Member entity. 

The Trust Liability Policy would respond, however, to an auto liability accident involving an employee’s vehicle while in the conduct of Member business if that employee’s own primary level of insurance was insufficient.  Trust coverage in this instance would be excess or secondary to the employee’s personal and primary insurance policy.  If injured in the accident, the employee would also be entitled to reimbursement of lost wages and the costs of medical care under the State Workers’ Compensation law. 

Volunteers would be extended this same secondary auto liability coverage; however, they must be acting on the Member’s behalf with specific prior approval or knowledge of a responsible Member official.  A person cannot just declare himself a “volunteer.”   Similarly, The Trust’s Liability Policy would cover the volunteer if another party alleged that the volunteer’s actions caused him injury or harm in an incident that did not involve a motor vehicle accident.  

If the volunteer himself is injured in the incident, unlike an employee, that person would not be entitled to reimbursement of lost wages under State Workers’ Compensation laws because that person is not an employee of the local governmental unit.  Lacking “employee status,” the volunteer could only file a civil “third-party” claim against the Member alleging the Member’s negligence caused his injury.

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