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Public & Political Office Loss Exposures

Bulletin – Friday, October 14, 2016

With election season in full swing, it seems appropriate to be particularly mindful of the exposures your clients might have if they serve as an appointed public official or hold a political office. This article from IRMI gives you a starting point for covering your clients.

Many insurance agents have clients who hold public or political office of some type. These clients have unique risks that should be smartly managed. For example, assume one of your new clients holds (or recently held) an elected or appointed public office. In some cases, the applicable public entity may not carry public official's liability insurance, school board liability insurance, or other appropriate directors and officers (D&O) liability insurance. Thus, you should make the following recommendations to clients with these types of loss exposures.

  • Verify that your political entity procures a public officials liability policy. If you are a school board member, a school board liability policy is needed.
  • If you are a current or former public or political official, verify that your entity has the appropriate liability coverage on an annual basis. This confirmation should be performed for 5 years after you have left office. A minimum liability limit of $1 million is recommended. Note that your homeowners policy does not cover any type of professional liability loss exposure (including political or public official activities), even on an excess basis.
  • Ask for a copy of your political/public entity's charter or bylaws. Verify that there is an indemnity agreement in the bylaws protecting, defending, and reimbursing you for your potential liability arising from your actions on behalf of the entity.
  • Request and confirm that an outside party or consulting firm periodically evaluates the insurance portfolio of your public organization.

In some cases, elected or appointed public officials are legally obligated to furnish a public official bond. Thus, it would be wise to verify that this bond is purchased, if required, with adequate limits of protection.

Get more personal lines insurance and risk management tips and ideas from IRMI.

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