The following was written by Sam Streiff, AWS Treasurer, and published in the AWS News, Summer 2009 edition.
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The American Wine Society (AWS) insurance program is the same as many business's insurance and it is quite similar to many individual's insurance. It has 3 basic types of coverage:
- Property Insurance, insuring the value of equipment, etc. owned by the society,
- Director/Officer Liability Insurance, insuring the society and its officers and directors against liability related to harassment, misstatements, etc., and
- Liability Insurance, insuring the society and its members, employees and officers against liability for actions they have taken that injured others or caused damage to their property.
Item 3, Liability Insurance, is the focus of these notes.
AWS's liability insurance is in 2 forms:
This liability insurance is of great value to AWS and its members because it means that if an accident or loss occurs that involves the AWS (and AWS members), we will be defended against the claim by the insurance company's legal staff. It means that we will not have to suffer the financial burden of any potential settlement or legal decision (up to the limits of the policies).
With the insurance, AWS members can feel quite secure knowing that their functions and AWS as an organization will survive if an accident occurs.
One of the most important considerations for AWS members, officers and employees to remember is that AWS's insurance carriers consider AWS to be an educational society: that our primary purpose is to educate our members (and to a degree the public) about wine. The insurance company is insuring us as an educational institution, absolutely not as a business involved in the sale, distribution, manufacture or promotion of wine. No AWS event should ever be organized in a manner that would lead one to assume that we are selling wine. Thus, we cannot charge for a specific glass or bottle of wine. But, it is acceptable for us to collect a fee for an event that will cover the estimated cost of the event. On the other side of the coin, the insurance company understands that AWS serves wine at its events so that attendees can learn about the wines, evaluate them, compare them, pair them with foods, etc.
That said, let's look at some frequently asked questions:
When does the insurance cover us?
Mainly during an AWS event and when things occur as a result of an AWS event. It would not cover us for things that happen while we are traveling to or from the event unless it could be shown that the problem occurred because of what happened during the event.
What defines "an AWS event?"
A couple of key factors: First, it must be publicized as being an AWS event. Second, it must follow AWS rules, of which there is only one: non-members (who are not employees of AWS) are only allowed to attend 3 meetings (3 in their lifetime). An event is not covered simply because a lot (or all) of those attending it are AWS members.
How is an AWS event run?
There are no specific guidelines, but it must include teaching/learning. It can be as simple as serving 2 or 3 wines and talking about them, or as extensive as judging 2 or 3 dozen wines or having a 2 hour lecture about certain facets a certain type of wine, wine and food pairing, or winemaking. A social meeting is still an AWS event as long as there is some educational aspect to it.
Who may attend an AWS event?
AWS members, AWS employees (including non-AWS judges), and guests who have not exceeded the 3 visit limit mentioned above. Of course, wine may not be served nor be allowed to be consumed by attendees who are under the legal age for drinking alcohol.
Where can an AWS event be held?
Anywhere that consumption of alcohol is legal (assuming wine will be consumed at the meeting). Note: If the facility/owner wants proof of AWS insurance coverage, you may request it from the AWS national office, but please allow adequate time (2 weeks) for its preparation.
What is the cost of the AWS insurance?
Business insurance is a price volatile commodity. The cost of the insurance varies as much with the companies' current investment income as with any other factor. Business insurance is bought one year at a time. Current cost for the AWS insurance program is around $6,000 per year, however, its cost can be said to range between $5,000 and $10,000 a year. That it a small portion of AWS's budget, but remember, we cannot buy the insurance unless we have the other parts of our business-like organization.
Is our insurance program unique?
Not at all. There are a number of other wine organizations that have similar insurance. However, insurance companies tend to specialize in different types of insurance, and while ours is similar to a restaurant or winery insurance, it is unusual in that we are a non-profit organization. There are few insurance companies that will sell it to us at a reasonable price.
If we have a loss, will the insurance continue?
Yes, to the end of the policy year or until we reach the policies' limits of coverage. Because there are an endless number of possible circumstances, we cannot give a more specific answer ahead of time. But it is likely we can get future coverage - the problem is that it may be cost-prohibitive.
Is the amount of insurance we have adequate (high enough)?
That is impossible to tell, because there are so many factors involved in insurance claims/settlements/awards. How much insurance one has is always a judgment based on the current cost of the insurance, budget/financial considerations, and other factors. AWS's Board is always interested in input from other members regarding the amount of insurance we have.
Can we get a higher level/limit of coverage?
Yes, but we must consider AWS's whole budget and the ongoing effect of the changes in the insurance market (such as insurance companies' investment income). Over time, when the members and the Board consider it wise, we will increase the limits.
As an AWS member/Chapter Chair/RVP, can I be sued for an accident related to an event?
Most lawyers say you can be sued for anything at any time. But it is unlikely that you will be named in a suit unless you have substantial involvement: i.e., if you're just attending the event, speaking at it, etc. it is not likely that you would be sued. Remember: If you are sued, our insurance company's lawyers will defend you because you are an AWS member attending an AWS event.
MOST IMPORTANT: Remember that we should all make all reasonable efforts to make sure everyone attending our events is in good enough condition to drive home, etc.