Subjects addressed in the Checklist were identified through studies of areas in which claims against associations covered by D&O have most often been brought.

You Can't Pass or Fail

It must be emphasized that the Checklist is not an objective criterion document, but instead a subjective evaluation document. The Checklist is not a test than an association can "pass" or "fail." Although the questions are designed to be answered either "yes" or "no," there are no right or wrong answers for all associations in all circumstances. In most cases the answer "yes" suggests a low risk for the association and the answer "no" suggests that consideration should be given to whether a risk exists and whether it is acceptable to the association. but an association's answers will not necessarily identify the association as one that is, or is not, "liable" or one that is, or is not, "insurable." Legal liability for an association can only be assessed with respect to its specific factual situation under applicable legal authority. Ultimately, only a court can determine if an association is "liable" when the association is challenged. Whether the association is likely to be able to secure insurance indemnification depends upon underwriting guidelines, available underwriting authority and other internal insurance company factors when the association applies for insurance. Ultimately, an association is "insurable" only if it is actually offered acceptable insurance coverage by a reputable insurance company.

You Can Reduce Your Risk

The exercise of attempting to answer the Checklist can be valuable, however, because the questions do relate closely to liability and insurability. Use of the Checklist may lead an association to more knowledgeable planning to eliminate or reduce unnecessary liability risks. Even if the association has no liability insurance and is "self-insured," this exercise can help make it a better risk. Use of the Checklist may lead an insurance company to more knowledgeable consideration of what coverages to offer, what conditions to specify, and what premiums to quote. This should reduce losses, improve insurers' profitability, attract insurers to the D&O market, and make the insurance more easily available to associations.

Insurability Checklist

Contracts
Publications
Personnel
Finances
Membership
Nonmember Services
Meetings
Codes
Standards
Credentialing
General

Contracts

1. Does the association use a written contract signed by all parties whenever it becomes committed to a significant legal, financial or other obligation?
2. Are contracts reviewed by staff before they are signed to assure that they contain all of the intended and acceptable terms such as for price or fee, date of delivery or performance, interest or penalties and termination or cancellation?
3. Are contracts reviewed by legal counsel before they are signed to assure that they contain minimum requirements, are legally enforceable, do not violate the law or present unanticipated tax or tax exemption problems, other problems?
4. Does the association insist that every contract it enters into, no matter who drafts the contract, must be written in "plain English" - with simple and understandable statements of terms and conditions?
5. Are any changes in the arrangements contained in a written contract made only by insertions that are initialed by all parties or by use of a separate written agreement signed by all parties?
6. Does the association assure itself that the individual negotiating on behalf of the other party actually has the authority to bind that other party?
7. Is there an established policy as to who among the volunteers and staff is specifically authorized to bind the association to legal, financial, or other obligations?
8. Are volunteers and staff periodically advised regarding authority to bind the association?
9. When several aspects of a function or arrangement must depend on one another for success, are related contracts for each aspect specified as contingent upon one another - for example, committing through different contracts with several hotels and a convention center to be used simultaneously for a large meeting, or committing through different contracts with separate suppliers of computer hardware and computer software?
10. When a contract incorporates another document into its terms by reference to that document, is the other document obtained, reviewed, approved and attached to the contract?
11. Does the association specifically assign someone to monitor performance under the terms of the contract by all parties involved?
12. When a contract provides that it is automatically renewed unless terminated by a specified date, is that date carefully logged on a permanent calendar to assure against unintended automatic renewal?
13. Are original, signed copies of contracts maintained in secure and permanent files?

Publications

1. Do the association's publications carry a copyright notice--the word "Copyright", the abbreviation "Copr.", or the "c" in a circle symbol, followed by the date of first publication and the name of the copyright owner?
2. Are important association publications registered with the Copyright Office of the Library of Congress?
3. Does the association assure that it owns the copyright for its publications and their content under the "work for hire" doctrine--either the work is created by an association employee who receives a salary or by someone else who is paid an author's fee or honorarium?
4. Where a work is created "for hire," is the ownership established in writing?
5. Does the association avoid copying or re-publication of copyrighted works of others except for excerpts, samples or other portions under the "fair use" doctrine?
6. When an infringement of the association's copyright is discovered, is the infringer pursued legally?
7. Does the association avoid libel by assuring that all statements in its publications which criticize individuals, firms, products or services can be supported as fair and accurate from clear evidence?
8. Does the association invite individuals or firms whose products or services are criticized in the association's publications to respond to the criticism in advance of publication?
9. Is the response published?
10. Does legal counsel review publications in advance that contain potentially libellious statements?
11. Does the association endorse or recommend particular products or services in its publications?

Personnel

1. Does the association avoid discrimination in hiring, firing and other employment-related decisions?
2. Does the association check all references provided by candidates for employment
3. Does the association generate and check additional references?
4. Does the association distribute a personnel manual to all employees?
5. Are all of the provisions of the manual uniformly applied?
6. Does the manual include job descriptions for all employees, list all employee benefits and provide for periodic evaluation against specific criteria?
7. Is the manual specific as to vacation benefits and the availability of "carry-forward" of unused vacation?
8. Are the job evaluation criteria objective, reasonable, and consistently applied?
9. Does the manual include criteria for determining when an employee is disabled and what the consequences and benefits are, if any?
10. Does the manual specify whether such conditions as AIDS are considered disabilities?
11. Does the manual make clear that staff are "employees-at-will" subject to termination at the discretion of the association?
12. Does the manual specify termination procedures and severance benefits, if any?
13. Is the manual reviewed on a regular basis by legal counsel to assure compliance with applicable laws?
14. When an employee's performance is inadequate, are procedures consistently applied for notification to the employee, establishment of goals and deadlines for improvement, and recording of the situation in personnel files?
15. Does the association have a plan for quickly confronting and resolving instances of workplace abuse of alcohol or drugs?

Finances

1. Does the association obtain an audited financial statement at least annually?
2. Are periodic interim financial reports issued to the governing board of the association?
3. Is a budget prepared each year, approved by the governing board, used to measure financial performance of the association, and adjusted when necessary?
4. Is the association's bookkeeper bonded?
5. Are internal financial and bookkeeping procedures in place, approved by the governing board, and reviewed periodically with weaknesses noted?
6. Is a segregation of duties maintained among those with financial and bookkeeping responsibilities?
7. Is access to association funds limited to specified individuals and in specified amounts, with the association's bank notified of the amounts beyond which counter-signatures are required?
8. When cash is received at the association's office or at conventions, are special procedures in place to assure control?
9. Are short-term and long-term plans or protocols for investment of association funds in place, reviewed periodically by the governing board, and revised when necessary?
10. Are all employee benefit programs reviewed periodically for compliance with applicable laws?

Membership

1. Is membership in the association available on an equal basis to all firms or individuals who compete with one another in the business or profession represented by the association and in the geographic area served by the association?
2. Are the membership criteria reasonable, objective and published in a document available to applicants?
3. If membership in the association is a legal or practical requirement for engaging in the business or profession, are any membership restrictions specifically reviewed to assure reasonableness?
4. Are any minimum business size or professional experience requirements for membership in the association necessary and reasonable?
5. Are prohibitions on members joining other "competing" organizations avoided?
6. Are requirements avoided that there be only one, or a limited number, of members from each geographic region or in each functional area or level of a business or profession?
7. Are foreign firms or individuals eligible for membership?
8. Are substantial initiation fees avoided which might preclude membership in the association by otherwise qualifying firms or individuals?
9. Are only objective methods used to determine if an applicant is capable of paying dues and assessments--i.e., credit reports, bank references, etc.?
10. Is membership voting to admit new members into the association avoided where the candidates have been found to meet the objective requirements?
11. Has there been no termination of membership in the association for reasons other than failure to qualify as within the specified business or profession and within the specified geographic area, failure to pay dues, or failure to adhere to an established business or professional code?
12. Has there been no termination of membership in the association because a firm or individual, otherwise meeting the membership criteria, was considered undesirable as a member--for example, a "discounting" business or a "self-aggrandizing" professional?
13. Are procedures established whereby those excluded from membership are given written notice of the reasons, reasonable opportunity to refute, and additional review by some unbiased body?

NonMember Services

1. Is every major program or service of the association made available to nonmembers--for example, trade shows or exhibitions, educational seminars, credit reporting systems, insurance programs, statistical surveys, product or professional testing or certification, technical or scientific manuals, industry or professional directories, or other services?
2. Are there no limited circumstances or burdensome conditions on the availability of services to nonmembers--for example, a nonmember fee for attendance at an educational seminar that exceeds dues and effectively compels membership, a nonmember choice of trade show booth location made after all members have chosen, etc?
3. Is any limitation or restriction on availability of the service to nonmembers clear, objective, non-arbitrary and evenly applied in all instances?
4. Have there been no denials of access by nonmembers to association services after members of the association urged that restrictions be imposed on the availability of the services to their nonmembers competitors?
5. Can all limitations or restrictions on the availability of services to nonmembers be justified, for example by the scarcity of resources required to provide the services, the need for active and continuous involvement of participants in the services, or some other legitimate goals of the association?
6. Are procedures established for dealing fairly with requests from nonmembers for unlimited or unrestricted availability of the service?

Meetings

1. Is each association meeting held according to a notice and agenda distributed in advance to attendees?
2. Are those who preside at association meetings made aware by staff or legal counsel of subjects that must not be discussed because of potentially adverse legal ramifications?
3. Are attendees at association meetings admonished against discussion of subjects with potentially adverse legal ramifications?
4. Are minutes taken of association meeting proceedings?
5. Do the minutes record all or most comments, views, criticisms, considerations or discussions of each subject rather than merely reports, communications and resolutions?
6. Are minutes prepared by staff rather than by volunteers?
7. Are draft versions of minutes removed from the association's records once the final version is approved?
8. Are minutes reviewed by legal counsel before distribution?
9. If audio recordings are maintained of association meeting proceedings, are they destroyed after use in preparing written minutes?
10. Are "rump," "secret" or "off-the-record" meetings by the association or among its leadership or members prohibited and avoided?

Codes

1. Does the association promulgate an enforceable code of ethics, code of practice or other peer review program based upon a business or professional code?
2. Is there no effect from the code directly or indirectly on the prices or fees of members?
3. Are there no limits on the areas or forms of business of members?
4. Are there no limits on the scope or kind of practice of members?
5. Are there no prohibitions on transactions or other relationships with particular businesses or professionals?
6. Are there no prohibitions on advertising or solicitation of customers, clients or patients, other than with respect to false or deceptive advertising or solicitation?
7. Are there no uniform terms and conditions of sale of products or provision of services?
8. Is the promulgation, revision, interpretation and enforcement of the code conducted according to established procedures that are consistently applied?
9. Are individuals or firms that are subject to an enforcement proceeding given notice of the charges, opportunity for a hearing, and right of appeal?
10. Is the promulgation, revision, interpretation and enforcement of the code closely monitored by senior staff and legal counsel?
11. Has any governmental agency reviewed and approved the code?

Standards

1. Does the association develop, publish or promulgate standards for products or services?
2. Is adherence to the standards voluntary rather than mandatory?
3. Does the association conduct testing or evaluation of products or services against the standards?
4. Is testing or evaluation conducted by outside firms rather than by the association itself?
5. Are the standards developed by consensus within the business or profession, as well as others affected by the standards?
6. Do the standards attempt to reflect "state-of-the-art" technology, encourage innovation, and avoid discrimination?
7. Are the standards reviewed regularly and revised when appropriate?
8. Is testing or evaluation available to nonmembers of the association?
9. Are standards activities conducted according to some uniform procedures or protocol such as those of the American National Standards Institute (ANSI)?
10. Is development, publications, promulgation, interpretation and revision of the standards conducted according to due process requirements and closely monitored by senior staff and counsel?
11. Do representatives of the government participate in the standards process?
12. Has any government agency reviewed and approved the standards?

Credentialing

1. Does the association issue certification or accreditation credentials to professionals or institutions?
2. Does the association establish the criteria for issuance of the credentials?
3. Are the criteria reasonably related to the function, competencies, proficiencies, achievements or other qualifications being evaluated?
4. Have studies been conducted to determine the validity of the criteria in measuring the competence or quality of professionals or institutions?
5. Does the association construct examinations for professional certification?
6. Does it administer the examinations through a contract test administration service rather than by itself?
7. Does the association establish curricula for educational program accreditation?
8. Does it conduct site visits to evaluate programs?
9. Are periodic or continuing re-assessments made of the professionals or institutions?
10. Does the association avoid encouraging the pubic not to deal with non-certified professionals or non-accredited institutions?
11. Does the association avoid encouraging private or governmental reimbursement agencies not to pay for non-certified professionals or non-accredited institutions?
12. Is certification or accreditation available to nonmembers?
13. If certification or accreditation is essential or extremely important in practicing the profession or operating the institution, are the requirements specifically reviewed to assure reasonableness?
14. Is denial of a credential made only after notice, hearing and appeal?
15. Is the credentialing program closely monitored by senior staff and legal counsel?
16. Does any governmental agency recognize or utilize the credentials offered by the association?
17. Has any governmental agency reviewed and approved the credentials?

General

1. Does the association have an established policy on legal compliance, including antitrust compliance?
2. Is the policy frequently and fully communicated to directors, officers, members and staff?
3. Is the leadership or membership of the association otherwise routinely advised, through oral or written communications, regarding avoidance of potential legal liability?
4. Is the association managed by one or more experienced and knowledgeable professional association executives?
5. Is the executive a member of ASAE or of an allied regional, state or city society of association executives?
6. Is the executive an ASAE "Certified Association Executive" (CAE)?
7. Has the executive attended educational programming on legal liability of trade and professional associations?
8. Does the executive receive and review books, periodicals or other literature covering association law?
9. Is qualified legal counsel available either "inside" (on staff) or "outside" (on a retained basis) to consult regarding potential legal liability situations?
10. Is legal counsel specially knowledgeable and experienced in trade and professional association law because of professional memberships, educational seminars, legal publications, or representation of other associations?
11. Does consultation with legal counsel typically occur when potential liability situations are first identified rather than later when a claim or challenge is received?
12. Does legal counsel attend meetings of the governing board of the association?
13. Does legal counsel regularly receive and review minutes, communications and publications of the association?
14. Does the association have governing documents--a corporate charter, bylaws, and a compilation of policies and procedures--that clearly specify the rights and obligations of members, directors, officers and staff?
15. Are the governing documents periodically reviewed to make them current and consistent with present interpretation of association law?
16. Is the purpose of the association stated clearly in its governing documents with no implication of illegality?
17. Are volunteers or staff indemnified through the governing documents or otherwise?
18. Is there an established policy as to who among the volunteers and staff is specifically authorized to communicate outside the association its views, comments and positions?
19. Are volunteers and staff periodically advised regarding authority to communicate on behalf of the association?
20. Are volunteers prohibited from using association letterhead except when authorized for a specific task, project or purpose?
21. Has the association previously carried any form of "errors and omissions," "directors" and officers" or "association professional liability insurance"?
22. Were there no claims made under that insurance?
23. Has that insurance been terminated?