Nonprofit Network

Is the topic of Americans with Disabilities Act (ADA) guidelines a mystery to you?

If you answered "yes" to any of these questions, you could be at risk for a third party lawsuit.

At the heart of many nonprofits is the desire to serve. While the goal of a nonprofit is to focus on a well-defined demographic, others in need can interpret their exclusion as discrimination. Even though the nonprofit may have valid reasons for turning away a client, it may violate the law. A nonprofit could find itself in the middle of an expensive lawsuit.

Third party lawsuits
By definition, the insurance company is known as the insurer, and the organization protected by insurance is known as the insured. The insurer and insured are considered the first and second parties of an insurance contract. When someone sues the insured, they become the third party and the resulting lawsuit is known as a third party lawsuit. Below is an example of a third party lawsuit:

A class action lawsuit was brought against an organization that assisted women seeking refuge from domestic violence. A group of men claimed they had often been denied services. Although the lawsuit was deemed to be without merit, it required a strong defense. The case was ultimately dismissed, but the defense costs exceeded $100,000.

Public accommodation lawsuits
Nonprofits that provide housing assistance for their clients are particularly vulnerable to third party lawsuits. The ADA addresses specific guidelines for public accommodation. Disabled clients may rely on a nonprofit to assist them in finding suitable housing. While the nonprofit may have done its best to find favorable accommodations, disabled clients may have difficulty with movement in the residence, accessing counters or sinks or using improperly outfitted bathrooms. In other instances, clients may be denied counseling or rehabilitation services due to a mental illness or past history with the organization. These are all situations that can lead to a public accommodation claim - a more specific type of third party claim.

It is important to be aware of all laws regarding services to the public. Failure to comply with these laws could result in significant risk. Nonprofits do not have to face these risks alone. A nonprofit management liability insurance policy from Monitor Liability Managers, LLC, protects the organization from expenses arising from legal claims and litigation. This insurance is more affordable than you may think. Premiums start at $650 and minimum deductibles at $500.

If you don't have insurance, contact the Bain Agency, NDANO's cost-saving partner for D&O insurance policies, to receive a quote or more information. Contact Steve Bain toll free at 877-234-2233.

This article was written by Jennifer Pearson, Monitor Liability Managers, LLC.