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Union Liability FAQ
Q: What is Union Liability Insurance?
A: Union Liability insurance is a form of errors and omissions insurance. It is a very broad form of coverage similar to Directors & Officers Liability and Professional Liability that covers actions that are of a judgment or fiduciary nature and that are actions generally not covered by other standard forms of insurance. It can be thought of as a malpractice policy for unions and their representatives.
As it is written on a very broad basis [by broad, we mean the basic coverage agreement is very simple and encompassing], there are quite a few exclusions. But generally speaking, the exclusions fall into one of three categories:
- Existing known claims or complaints (you cannot purchase insurance on a burning/burned building).
- Another form of insurance better satisfies the type of claim (i.e., Automobile, Workers Compensation, ERISA, General Liability).
- It would/could be against public policy to insure those actions.
Q: Who is covered by Union Liability insurance?
A: The Union itself and any representative of the named union is also insured.
Q: What are some examples of Union Liability Claims?
A:
- Local Union sued for wrongful termination by staff member alleging his firing was retaliatory
- District Council sued for failure to refer members to an employer who was delinquent on fringe fund contributions
- International Union sued for content of newsletter
- International Union sued for election violations
- Class action against group of International Unions for failure to represent and negligence in collective bargaining negotiations
Q: If I am insured by the policy, why do I need to purchase an Individual Labor Leader Endorsement?
A: There are three exclusions that relate to personal malfeasance, or misconduct, in the Union Liability policy. The Individual Labor Leader Endorsement buys back defense cost coverage for those three exclusions.
Q: What are the three exclusions?
A:
- Dishonesty of the individual
- Personal profit or taking advantage of the labor official's position to provide income to the individual of which he/she is not entitled
- Conflict of interest in dealings with the union.
Q: If I purchase the Individual Labor Leader Endorsement, what happens in the event I am named in a suit?
A: Unless it is excluded, the basic policy will come to your defense and the union's defense.
If it falls within the three enumerated exclusions, then the Individual Labor Leader Endorsement will provide defense coverage for you.
Q: Will the policy pay for other legal matters such as tax preparation, traffic violations, etc.?
A: No. This is a Liability policy, not a Pre-Paid Legal Expense policy. Pre-Paid Legal Expense is an employee benefit.
Q: Why can't the union provide me defense?
A: Under Title V of the Landrum Griffin Act, representatives of a union are held accountable for their actions on behalf of the union. A representative is expected to exhibit prudent behavior on behalf of the union -- to do what is best for the benefit of the union. As a result, the union is precluded from providing defense for an individual violating this law. The three exclusions that are bought back by the Individual Labor Leader Endorsement are on the basic policy because of this law. This is the reason the individual must pay for the Endorsement -- the union cannot pay for the defense in these cases, therefore the union cannot pay for insurance paying for the defense in these cases.
Q: If the policy provides for wrongful acts and provides a defense, why does the Individual Labor Leader Endorsement only provide defense coverage and not indemnity coverage?
A: As we mentioned initially, there are several reasons for an exclusion being placed on a policy. The three exclusions that are bought back by the Individual Labor Leader Endorsement are of the third type -- it would be against public policy to insure for these actions.
However, the defense of those matters occurs prior to an adjudication. Once a guilty verdict is rendered against the individual, it would be against public policy to pay the judgment. To pay the judgment would remove the punishment against the individual, thereby removing responsibility from the individual.
Q: Who should purchase the Individual Labor Leader Endorsements?
A: Anyone who is in a position of trust should consider the coverage. If you can sign a contract, make a purchase, or service the labor agreement, you are a potential party to a conflict of interest.
