Association Liability Claim: Employee Theft Costs $220,000
What Happened: A not-for-profit recreational association with 7 staff members and $2.1 million annual turnover discovered that four employees had been systematically stealing alcohol and stock worth over $250,000. Surveillance cameras revealed the employees and their friends were taking inventory and selling it to unsuspecting buyers. When the theft was discovered, police charged and prosecuted the employees, but they could only repay $30,000 of the stolen amount, leaving the association facing a massive financial loss that could have destroyed their operations and their ability to serve members.
How Proper Association Liability Insurance Helped: The club had comprehensive association liability coverage that included employee dishonesty protection. This specialised insurance for associations and clubs responded to the claim, providing $220,000 in compensation to cover the stolen stock and alcohol. This protection allowed the not-for-profit association to continue serving their community despite the devastating employee theft. The insurer also pursued separate recovery proceedings against the fraudsters to recoup additional amounts.
This case study demonstrates why associations need specialised insurance beyond standard business coverage. Learn more about our Association Liability Insurance to protect your club or organisation against member claims, employee dishonesty, and operational risks.
What makes Association Liability insurance different from standard business insurance?
Association Liability insurance is specifically designed for clubs, societies, not-for-profit organisations, and member-based groups. It addresses unique risks that associations face, including committee member liability, volunteer accidents, member disputes, event cancellations, and employee dishonesty. Standard business policies often don’t adequately cover the specific exposures that associations encounter in their operations and governance.
Why do associations and clubs need specialised liability coverage?
Associations face unique risks, including volunteer management, member activities, committee decisions, fundraising events, and premises liability. Association Liability insurance provides comprehensive protection for these specific exposures, plus coverage for employee crime, professional indemnity for committee members, and protection against claims arising from association activities. Without proper association coverage, clubs and societies can face significant financial exposure from member claims or operational losses.