Protection through Insurance

The second form of protection available to clubs and groups is insurance. Insurance can be taken out to cover both incorporated and unincorporated bodies, although some insurance companies are now loathe to insure unincorporated bodies. As incorporation effectively limits the liability of the members of the club or group, it could appear that insurance is unnecessary.

Insurance however, is still necessary for the following reasons:

on moral grounds it would be sad to see a young sportsperson badly injured by the negligence of the club or group, unable to recover damages because the club or group was incorporated and had no assets and no insurance
an incorporated club or group may have considerable assets, in which case a person making a successful claim for damages would wind up the company and sell its assets to satisfy, if only in part, the court judgment made in his favour
not only will 'outsiders' be unable to recover from the uninsured incorporated body beyond the extent of its assets, but neither will its own members. The body may owe it to its own members to have member to member insurance cover.

It has been suggested that if a club or group is insured, its members are adequately protected and incorporation is therefore unnecessary. This is not true for the following reasons:

insurance policies rarely provide cover for all types of injury in all sets of circumstances
an insurance company may in particular circumstances successfully deny liability with disastrous effects for the executive and committee of what is then an unprotected body
whilst cover is commonly taken out to the tune of several million dollars, it is not uncommon for court judgments to be in excess of $1M
if judgment is given against the executive or committee of an unincorporated body for an amount exceeding the amount of the insurance cover, the executive or committee will be personally liable for the balance.