Trade associations deal with many of the same risks and liabilities as other organizations, but they have also exposed to additional challenges thanks to their unique nature. For many trade associations, insurance provides valuable protection against some of these risks and liabilities.
What Constitutes A Trade Association?
Trade associations are organizations of businesses that all operate within the same industry or profession. Trade associations are typically not-for-profit and are run by officers who are elected from the member body.
They are generally publicly active and carry out public relations for their industry. They aim to improve their industry’s standards and efforts. It is important to note that all the businesses must be within the same industry for the body to be officially considered a trade association.
What Are The Top Risks And Liabilities For Trade Associations?
Here is a look at some of the top risks and liabilities faced by trade associations.
Because trade associations serve as gathering points for industries to share ideas and solve problems, they are vulnerable to being accused of monopolistic behavior.
Even though trade associations are not formed as a money-making venture, they may be accused of behaving like a conglomerate because some of their decisions or regulations could limit certain aspects of the free market. Be careful as many Directors and Officers policies exclude this coverage.
Some trade associations provide members with education and training that awards certificates or accreditations upon completion. These accreditations may be used to enhance a member’s resume or title and could give them access to important job opportunities.
However, associations could face liability claims if the accreditation is not filed properly or on time or a member is decertified for not following certain rules. Professional liability insurance can help with defense costs, judgments, settlements, and witness fees in these cases.
Many trade associations publish newsletters, and improperly vetted articles could result in lawsuits related to libel or defamation. This is another area where professional liability policies can offer protection.
Officers At Risk
A trade association’s officers need to implement strict guidelines governing meeting etiquette and discussion that apply to all members.
Decision-makers could face legal backlash related to antitrust laws, and directors’ and officers’ insurance can offer protection against claims of these violations, which could result in very steep fines. This type of insurance can also help to protect your trade association’s reputation.
One big area of anti-trust laws is price-fixing. The actions of trade associations and their members may be construed as price fixing in some cases. Trade associations should avoid discussing income, profit margins, and pricing strategies to prevent lawsuits.
Associations that provide research grants in their industry can be vulnerable to liability risks stemming from improperly administered grants. For example, delayed grant payments that cause research to be postponed for so long that it misses a publication deadline could lead to negligence claims.
Supply control and shared supplier information is another area of potential risk. When a trade association gets involved in the relationship between suppliers and their members, it could lead to problems. Associations should not recommend or suggest specific suppliers of products to their members.
Standardizations And Memberships
Some association actions aimed at implementing certain standards could constitute an anti-trust law violation if it could be perceived as fixing the market for one type of service. Associations must make decisions related to setting standards without the influence of any party who could profit from the new requirements.
Trade associations with at least one employee could be vulnerable to workers’ compensation claims if an employee experiences an injury or accident related to their work. Workers’ comp insurance can help shield against lawsuits related to employee injuries and cover related expenses, such as medical treatment and lost wages.
Data Protection & Cybersecurity
Trade associations, like all organizations, are required to safeguard personally identifiable data they obtain about members. They must also take steps to protect themselves against data breaches. Even with good cybersecurity measures and practices, breaches still happen.
Cyber liability insurance can cover losses stemming from breaches that affect your association’s information and data belonging to third parties. Policies can cover notifying those whose information was compromised, fixing hacked websites, and restoring your reputation in the aftermath of a breach.
Get In Touch With The Trade Association Insurance Professionals
Trade associations are often scrutinized by the government, businesses who are not members of their association, and private citizens. Having the right insurance in place can protect your trade association’s reputation and cover a wide variety of third-party claims.
Need to see if your D&O policy has an antitrust exclusion? Reach out to the trade association insurance professionals at CI Solutions to find out more about the insurance policies you need to cover all the bases for your trade association by calling 703.988.3665 or by applying for a trade association insurance policy online.