YMCA Management Webinar Series: Program Structures

These are the standard coverages we typically see for YMCAs. While names may vary slightly depending on your policies, these should look familiar:

• General Liability
• Abuse and Molestation Coverage
• Workers’ Compensation
• Property Insurance

General Liability covers bodily injury and certain personal claims arising from YMCA operations—such as slips, trips, and falls. It is important to understand exactly what is included in your policy.

Abuse and Molestation Coverage is one of the most critical protections for YMCAs due to childcare, aquatics, and peer-to-peer programs. This coverage addresses misconduct, abuse, and harassment by staff, volunteers, or participants, and helps cover legal fees, settlements, and damages. Historically, limits of $20 million were common; today, securing $10–12 million can be challenging. Prevention measures, including accreditation requirements like Praesidium and comprehensive staff training, are essential.

Workers’ Compensation provides coverage for employees injured on the job, including medical expenses, rehabilitation, and lost wages. Implementing a return-to-work program is key to reducing costs and improving outcomes. Associations should also monitor experience modification factors and deductibles, as these directly impact premiums.

Property Insurance protects YMCA-owned buildings, equipment, and other property against risks such as fire, theft, vandalism, and natural disasters. Given recent events—hurricanes, severe storms, and wildfires—property coverage has become increasingly difficult to place. Regularly review and update valuations, ensure new equipment is listed, and confirm that coverage limits are adequate. Business income coverage is often misunderstood; it applies only when triggered by physical damage. COVID-related shutdowns were excluded because they did not involve physical damage, and while contagious disease endorsements exist, they are prohibitively expensive.

Auto insurance covers YMCA-owned vehicles, transport vans, maintenance vehicles, and hired or non-owned vehicles used for association purposes. This includes staff using personal vehicles for tasks such as bank deposits or rented vehicles for trips.
Historically, auto insurance was a relatively stable line of coverage. However, over the past eight years, it has become the most expensive and least profitable line in the insurance industry, surpassing workers’ compensation.

The primary drivers of this trend are:

• Nuclear verdicts: Large jury awards in auto-related lawsuits have increased dramatically.
• Escalating claim demands: What used to be a $250,000 claim demand is now often $2.5 million or more.

Approximately 80 cents of every dollar spent on auto insurance relates to physical damage, but liability coverage is the true driver of premium costs. Associations should also review whether abuse and molestation exclusions exist in auto policies. If exclusions are present, work with your broker to determine how coverage would apply in scenarios such as incidents occurring in transport vehicles.

D&O insurance protects directors, officers, and board members against claims arising from governance decisions. Most policies also include Employment Practices Liability (EPL), which covers issues such as wrongful termination, sexual harassment, and discrimination.

Key exclusions to watch for:

• Biometric Data (BPA): Related to fingerprint scanners or similar technology used for building access.
• Wage and Hour Claims: These claims, often tied to overtime pay disputes, are costly to defend due to extensive accounting and audit requirements, even though settlements are typically minimal.

D&O coverage is essential for YMCAs because of the significant governance responsibilities, including grant applications and compliance with evolving social and legal standards.

Cyber insurance protects against data breaches, ransomware attacks, and other cyber threats. Coverage typically includes:

• Costs for data recovery and system restoration.
• Credit monitoring for affected individuals.
• Tabletop exercises to identify vulnerabilities and strengthen cybersecurity protocols.

Cyber incidents are increasingly common. Even routine email exchanges can trigger malware attacks, making this coverage critical for all associations.

Crime insurance addresses risks such as theft, fraud, embezzlement, forgery, and unauthorized transactions. It also covers employee dishonesty and social engineering scams, which have become prevalent in recent years. Best practices to reduce exposure:

• Implement two-step verification for financial transactions.
• Conduct regular audits.
• Train staff to identify phishing and fraudulent email attempts.

Umbrella and Excess Liability Coverage provides additional protection above primary coverage limits. These policies are essential for large claims that exceed base limits. Historically, YMCAs could secure $20 million in excess coverage; today, limits are often capped at $5–10 million, and in some cases, only $1 million.

Despite market pressures, we strongly recommend purchasing as much excess coverage as financially feasible. Reducing umbrella limits does not deter plaintiff attorneys from pursuing large verdicts. Remember the “three A’s” or “three W’s” of YMCA liability exposures:

• Abuse, Auto, Aquatics
  or
• Wheels, Weirdos, Water

Other specialized coverages may be appropriate depending on your association’s size and risk profile:

• Fiduciary Liability: Protects against claims related to retirement plan management, such as excessive fee lawsuits.
• Reputational Risk Coverage: Addresses financial losses tied to brand damage following high-profile incidents.
• Civil Unrest and Terrorism Coverage: Recommended for associations in urban areas or high-risk regions.
• Non-Physical Damage Business Income Coverage: Provides protection for income loss due to reputational harm or other non-property-related triggers.

This distinction is critical, especially for abuse and molestation coverage:

• Occurrence Policies: Respond based on when the incident occurred, regardless of when the claim is reported. Limits remain fixed for that policy year.
• Claims-Made Policies: Respond when the claim is reported, requiring continuous coverage. If coverage lapses, prior years are uninsured unless a “tail” policy is purchased.
• Claims-made premiums typically start lower but increase over the first five years before stabilizing. Associations considering claims-made coverage must plan for continuity and understand the long-term implications.

The insurance market is challenging, premiums are rising, limits are shrinking, and abuse coverage is increasingly difficult to secure. Associations should explore strategies such as higher retentions or deductibles to manage costs.

Retentions can start as low as $1,000 but may need to exceed $250,000 for abuse coverage to significantly impact premiums. Before adjusting deductibles, evaluate historical claims and total cost of risk to ensure financial readiness.

• Maintain as much excess coverage as possible.
• Understand policy structures, exclusions, and emerging risks.
• Foster a culture of risk management and safety.
• Engage brokers proactively to explore creative solutions and alternative markets.

For more information, visit Alliant.com/YMCA