Union Leaders Liability Insurance

Persons engaged in union activities generate a number of specialized professional liability exposures that are not covered by the normal commercial general liability (CGL) policy forms. These exposures arise mainly from the Landrum Griffin and the Taft-Hartley Acts, which permit union members to sue union leaders for alleged official misconduct.

The Landrum-Griffin Act stipulates that union officials who are sued may not use union funds or union counsel for defense. There is also the exposure that the labor union itself has should it be obligated to reimburse union officials for their own legal counsel if it is ultimately proven that the officials were innocent of the charges made.

“Insured” means the Union named in the Declarations and any person who has been, now is, or shall become a duly elected or appointed director or trustee, a duly elected or appointed officer, an employee of the Union, board members, committee members, shop stewards, business agents whether or not they are salaried, and any other person acting on behalf of the Union or at the direction of an officer or the board of directors of the Union.

The policies consist of two key coverage parts: labor union liability, and personal injury liability. The first coverage addresses the standard errors and omissions exposure, such as errors, misstatements, misleading statements, and breaches of duty of fair representation. The second part applies to the typical personal injury perils such as libel and slander plus coverage for plagiarism, misappropriation of ideas, copyright and trademark infringement, and unauthorized use of title.

One unique aspect of the union liability policy is the fact that it permits the insured union to select defense counsel in the event of a claim. The insurer does, however, reserve the right to veto the insured’s selection. Nevertheless, this is a valuable coverage extension that is rarely found in other types of liability coverage.

Defense coverage is available by endorsement for individual labor leaders in the event that a claim is alleged against them involving one of the three “dishonesty” exclusions under the policy (dishonest activities, improper personal profit, conflict of interest). The extension provides a separate limit for the defense of such claims. However, the payment of defense from this limit reduces the policy’s overall aggregate limit. The premium for such coverage must be individually paid from the personal funds of the insured labor leaders because it is against public policy for a union to expend funds to cover the defense of potentially dishonest acts.