Why Accident Coverage Belongs in Social Services’ Risk Management Toolbox
Affording health care is becoming more and more difficult for the average American. Medical costs keep rising, and high-deductible health plans mean even insured patients are left with budget-busting bills. This trend has implications beyond the health care industry and individual bank accounts.
When injuries occur on an organization’s property or during a sponsored event or activity, injured parties struggling to pay for care can sue in order to recoup some expenses, and businesses end up footing the bill.
That risk is nothing new, but it is becoming more acute for organizations that serve large swaths of their community and that don’t have the deep pockets to fund settlement after settlement.
“Think of camps and clinics, childcare and health care facilities, church groups and other not-for-profit and social service organizations such as food banks,” said Michael Flood, Vice President for the Accident and Health Division, Philadelphia Insurance Companies.
What many of these organizations have in common is they act as community linchpins, providing programs and services that are often central to the lives of local residents — especially children. They also in many cases rely heavily on volunteers. Together, these characteristics can increase pressure on organizations to go above and beyond to take care of the people who serve them and who utilize their services.
“With social service entities, nearly every one of them has volunteer exposure and the volunteers are often not covered under workers’ compensation. There’s a need to provide medical insurance in case one of these volunteers is accidentally injured. That’s increasingly true for participants in sponsored activities as well,” Flood said.
That’s where accident insurance comes into play. According to Flood, carrying this coverage helps organizations both protect themselves from liability lawsuits and do right by their volunteers and participants in two key ways:
1) Covering Medical Expenses Mitigates General Liability Exposure
If a volunteer or a participant in a sponsored activity gets injured, in many cases they reach out to an attorney to obtain some guidance on next steps — especially if there’s been any negligence.
“The more severe the injury, the greater the likelihood that an attorney is going to get involved,” Flood said. “Even when there has been no negligence and the sponsoring organization has done everything right, individuals under financial pressure will occasionally reach out to an attorney to request some advice as to how they should handle the situation.”
An incident at a fundraising event in 2011 offers an example. A farm was hosting its annual ‘Punkin Chunkin’ event to raise money for local charities. After each pumpkin is launched, volunteers race out onto the field in ATVS to mark their landing spot.
One volunteer’s vehicle hit a pothole covered by tall grass and severely injured his spine, losing function in the lower half of his body. He sued the farm for negligence and failure to provide appropriate training to volunteers, asking for hundreds of thousands of dollars to cover his burgeoning medical bills.
Given the rising cost of care, though, it doesn’t take a severe injury for bills to pile up. Simple sprains and strains arising from slips and falls can be enough to create financial stress.
Had the farm had accident insurance in place, the policy would have been first to respond to any expenses not covered under the volunteer’s private health plan, and he, therefore, would have had less motivation to file suit.
“When the attorney finds out that there’s this type of policy in place, it often stops any additional legal action in its tracks,” Flood said. “That significantly reduces general liability exposure.
“In fact, one of the major trends that we’re noticing is that more and more general liability underwriters are requiring that an accident insurance plan also be in place for many of these groups.”
2) Providing Care Protects Reputation
Organizations of every type and size are facing rising expectations to act as socially responsible corporate citizens. But entities that provide services directly to the community and rely on the donated time of community members perhaps have a greater interest in projecting and protecting an image of empathy and compassion.
Beyond protecting themselves from lawsuits and fulfilling underwriters’ demands, accident policies equip organizations with the ability to help their volunteers and participants in times of need.
“Participants and volunteers may have a private health insurance plan, but what we are seeing more and more frequently is that these plans have a very high deductible. Some as high as $5,000 or more for a family,” Flood said. “So even insured people have a hard time covering this expense, not to mention other out-of-pocket expenses associated with health care, such as copays and coinsurance.”
And in cases where injured parties have no coverage at all, the accident plan may be the only backstop in place.
“A big reason that organizations purchase this coverage is just general goodwill. If somebody does get hurt while the participant is under the supervision of the sponsoring organization, that organization really wants to make sure that they’re doing everything they can to minimize financial burden, regardless of the potential for a lawsuit,” Flood said.
That, in turn, helps the organization stay in good standing within the community and builds a reputation of reliability and altruism.
Rounding out Coverage for Service-Oriented Entities
The benefits of an accident insurance plan — mitigating general liability and perpetuating a good reputation — of course apply to any business. But Philadelphia Insurance’s products are not built for just any business; they are focused on serving the needs of organizations that serve others.
Philadelphia’s history is rooted in the human services sector. The company got its start in the 1980s, writing coverage for social service providers whose unique risks and small budgets often made obtaining coverage difficult. Today, these providers still constitute roughly one-third of the business.
“Philadelphia Insurance Company is the largest underwriter on the property and casualty side of a human services business,” Flood said. “Now that we’ve built out an accident and health division, we are effectively positioned to provide a more well-rounded and comprehensive package for our customers in this sector.”
The coverage was also designed to be user friendly, with the rates, exclusions, coverage benefits and limits all built in, so insureds can receive a quote and bind a policy within 24 hours. That’s true even for many unique entities or difficult exposures.
“We have very experienced underwriters who know this business extremely well, and they are very agile. They understand the nuances and try not to say ‘no’ to unusual risks that come to us. Our focus is on solving the customer’s problem,” Flood said.
Insureds also have access to a portfolio of risk management resources so policyholders can better prevent accidents in the first place. Most often, it comes down to conducting premises inspections, conducting safety training with volunteers and ensuring that any equipment is fully functional.
To learn more about Philadelphia’s accident and health products, visit https://www.phly.com/products/AccidentandHealth.aspx.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.