NAD Working Policy
North American Division Working Policy 2020 – 2021
S 60 32 Miscellaneous Professional Liability — Page 660
3. All attorneys who are hired or retained by denominational entities shall be required to maintain errors and omissions liability insurance with minimum limits of $1,000,000. Evidence of coverage should be provided to the organization prior to the commencement of their service.
E&O Insurance
Insurance is not the most exciting topic to talk about until your organization needs the coverage. The North American Division Working Policy (NADWP), or red book, requires all Seventh-day Adventist (SDA) organizations to carry miscellaneous professional liability insurance. These master insurance policies insure employees of SDA organizations acting within the scope of their job description or their assigned duties are covered by errors and omissions liability insurance. NADWP S 60 10* and S 65 10* set the minimum limits for all employees of SDA organizations.
Special Note:
Any person who has ever been convicted of a felony is not covered by the standard liability policies the SDA church carries. These individuals may not engage in PGTS activities without a special vote of approval by the organization’s governing committee and the acquistion of special liability coverage from Adventist Risk Management (ARM).
When SDA organizations retain an attorney who is not an employee of the organization, NADWP S 60 32.3* requires the attorney to have a minimum errors and omissions liability limit of $1,000,000. This is not to be confused with NADWP S 65 10*, which states a higher minimum for attorneys who are employees of SDA organizations.
All accredited NAD Planned Giving & Trust Services (PGTS) organizations must have an attorney advising them, even if it is only every five years to review the attorney opinion letter required by NAD PGTS Standard #4. All attorneys must provide evidence of errors and omissions liability insurance that is currently in force.
Retaining an Attorney
Before retaining an attorney, evidence that the attorney carries errors and omissions liability insurance coverage must be provided to the organization. As long as the policy meets the minimum requirement, the page of the policy showing the coverage is sufficient evidence for NADWP compliance.
The purpose for errors and omissions liability insurance, both for employees and the attorney the SDA organization retains, is to provide coverage for mistakes made by an employee while following the direction of an attorney retained by the SDA organization. If these unintentional mistakes result in a lawsuit against the organization, then both the organization and the attorney have liability coverage to defend themselves and meet the liability that may result.
Errors and omissions liability insurance will not cover illegal acts if there is intentional fraud by the employee, the attorney or both. NADWP S 60 10 lists $3,000,000 as the required coverage that each organization must carry for employee dishonesty.
Evidence of Insurance
As part of the engagement process when retaining an attorney, a request should be made for the attorney to provide evidence that their errors and omissions liability insurance meets the minimum requirement of $1,000,000 specified by NADWP S 60 32.3*. This coverage should be confirmed it is in effect for each year or partial year that an attorney’s services is retained. This evidence must be made available to GCAS when a trust review is conducted.
A good best practice is to use a checklist when retaining an attorney, making sure to include obtaining verification of the attorney’s E&O insurance coverage. You could also create an annual or semiannual checklist of items that must be updated regularly to remind you to obtain evidence your attorney has met the required liability insurance for your next trust review.
*See appendix for the full text of all of the NADWPs that are referenced in this article.