Risk and insurance for Canadian charities abroad, part 1

publication date: Mar 9, 2012
 | 
author/source: Kenneth A. Hall
Dorothy's famous observation to Toto - "I've a feeling we're not in Kansas anymore" - often sums up the initial reaction of those experiencing the developing world for the very first time.  In North America we live in a bubble of relative economic stability, social peace and the rule of law; an existence that is unheard of in most of the developing world.Kenneth Hall photo

The usual rules don't apply outside the North American continent, particularly in developing countries, and insurance is no exception. Whether you are a large relief and development organization with staff on long-term foreign assignments or a local charity sending volunteers on a work trip, you must clearly understand and address the risks to your organization, personnel and property.

This series of articles will introduce you to some of the basic risk categories associated with relief and development work outside Canada and the United States, including tips on the kinds of insurance protection available.

Property risk

If your organization is involved in constructing or owning buildings, you should be aware that most Canadian insurance companies will not usually cover real property outside Canada. Depending on the legal protection of property rights in the country where you are operating, fire insurance and other physical damage coverage may be available. However it is best to check with your insurance agent or broker in Canada first, as some insurers will insure foreign property risk under certain conditions. 

There are also North American insurers with international subsidiaries who specialize in global property risk. They are capable of underwriting and insuring damage to infrastructure and other special projects, such as dams, irrigation and hydroelectric facilities.

The primary property risk facing most Canadian charities is loss or damage to equipment transported temporarily overseas by employees or volunteers, including such items as computer, video, telecommunications, medical, dental, engineering and construction equipment.

Canadian insurance companies offer property policies to cover contents kept at the owner's property and will often include extensions for items taken off premises to temporary locations, or while in transit between various locations.  However unlike a Homeowner's policy which usually automatically includes a specified amount of coverage for personal contents taken on vacation outside Canada, the extensions in a Commercial or Institutional policy generally restrict coverage for equipment to within Canada and the continental United States.

If your organization owns or rents equipment that is used in relief and development work or is taken temporarily abroad, you may obtain optional physical damage insurance coverage through a "Worldwide Property Floater." A description of the items to be covered (including manufacturer, model, serial number and value) must be provided to the insurance company in advance. Although this coverage is restricted in certain countries and is often more expensive than regular domestic coverage in Canada, it can be an effective way to address the potential loss of valuable equipment. It is best to check with your insurance provider in advance regarding coverage availability and cost.

Liability risk

Most insurance policies issued by Canadian insurers contain a policy territory restriction that limits coverage only to claims that occur within Canada and the United States, or that provides limited worldwide coverage for employees temporarily outside Canada while acting within the scope of their duties.  However it is preferable to obtain a General Liability policy that contains coverage with a full worldwide policy territory for any of your organization's temporary or permanent operations and activities outside Canada.

The primary risk is for liability actions brought against your organization in a Canadian or US civil court, even though the accident or injury took place elsewhere. The reason for this is that much of the rest of the world, especially developing countries, has little or no civil liability system, and in any event, the potential awards available in North American courts are more attractive and substantial. 

Another concern is the possibility of death or injury to passengers in a motor vehicle. Insurance coverage and licensing for "owned" (organizational) vehicles in most foreign countries must be arranged either through the local government or through private insurers operating in that jurisdiction. The level of coverage, if available at all, can vary widely.

Coverage for private or "non-owned" vehicles used on behalf of a business or organization can be covered with a Non-Owned Automobile Liability Policy, often as part of a General Liability Policy. However the standard Non-Owned Auto Policy only covers accidents taking place within Canada and the United States, whether or not the General Liability Policy has a full worldwide policy territory.

Coverage for non-owned vehicles outside Canada is only available by purchasing a separate Excess Auto or Umbrella Liability Insurance Policy, assuming there are no territorial restrictions or non-owned auto  exclusions. Although Umbrella policies are primarily used to provide excess coverage limits, they also have the advantage of a drop-down feature that can cover risks not insured in an underlying General Liability policy, such as non-owned vehicles outside Canada and the United States.

The subject of abuse claims is an important one. Only a handful of insurance companies in Canada provide abuse liability coverage for charitable organizations. Although it is possible for relief and development organizations to qualify for such protection if they have acceptable prevention plans in place, they are not eligible if they own, operate or manage orphanages and other residential care facilities in the developing world.  The simple reason is that it is virtually impossible to impose the same level of worker screening and prevention procedures in foreign residential care facilities as in Canada.

Watch for part 2 of this article, which addresses medical, security and political risks.

Kenneth A. Hall is president of Robertson Hall Insurance. He specializes in insurance protection and risk management advice for over 6,000 churches and Christian charities across Canada. He is a frequent presenter at national denominational conferences, para-church leadership gatherings and various regional seminars. His "Facing the Risk" series of articles highlights the current issues facing Christian charities and their leaders, including abuse prevention, board governance, counselling services and injury prevention.

For more information, email him at  or visit http://www.robertsonhall.com/church_home.html.

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