RAQs: Recently Asked Questions

Topic: Should Small Public Libraries Carry Bonds? - 10/12/2022
Is bonding recommended for small public library director?   ...
Posted: Wednesday, October 12, 2022 Permalink


Is bonding recommended for small public library director?



I won't tease the readers here; generally,[1] the answer is "no."

There are three reasons for this:

Reason 1: a public library director, unlike a library system treasurer and other local "public officers" isn't required by law to carry a bond.

Reason 2: If a public library has the right fiscal controls in place (meaning the director is never solely entrusted with fiscal authority--something that should never happen), there should be little risk of the type "bonding" is designed to mitigate.[2]

Reason 3: the majority of alleged wrong-doing by a public library director should be covered by a library's "Directors and Officers" and "General Liability" Insurance.

For this reason, while "bonding" is not required for most public library directors, a library having adequate insurance is critical.

This is why understanding the scope and costs of a library's "Directors & Officers Insurance," as well as its "General Liability" and "Premises Liability" policies, are critical annual tasks for a library board.

This type of assessment should happen every year with enough time to make sure the library can arrange new coverage if the answers are inadequate or the rates aren’t that competitive (no less than four months before renewal).

Questions to ask the broker should be based on a board's assessment of "what could go wrong?", and can include things such as:

Does our policy cover claims of discrimination, including sexual harassment?

Does our policy cover employee theft?

Does our policy cover alleged copyright and trademark infringement (or "advertising injury")?

Does our policy cover data breach of computers controlled by the library?[3]

What types of claims are excluded?[4]

What is the deductible?[5]

What is the process for reporting possible claims?

Insurance matters are complex and assessing coverage can present a lot of legal and industry jargon.

So, as a primer on the interrelationships and differences in "library world” between 'bonding," "insuring," "indemnifying," "hold harmless" and "Directors and Officers insurance" here is a short poem:

Library bonding, insurance, indemnifications...

What the heck are the differentiations?

Although the distinctions could fill a tome

Here are four rhymes to bring it home:

Director, officer, trustee...

should be insured against liability;

For anyone who with responsibility

The coverage can offer indemnity.

If your library will undertake construction

A performance bond should guarantee completion.

If you need to raise some building money

An approved "bond" can bring the honey.

For a library system treasurer[6]

An "undertaking" you must procure.

For all of these, routine review

Is something that a board should do.





[1] There is always an exception to what is "generally" true in the law.  For instance, a large library that puts additional fiscal responsibility on the library's executive director could require such a thing.  But that would be the exception...to find out why, keep reading.

[2] What is "bonding" you ask?  I have a short poem for you (see below).

[3] Many times, it is the cooperative library system's computers that need this coverage...an arrangement that varies from system to system in New York.

[4] This is a critical consideration!

[5] This one is important!  If you have a $75,000.00 deductible, for many claims, you might as well not have coverage.

[6] Actual requirement for a treasurer of a cooperative library system is: "Before entering upon his duties, such treasurer shall execute and file with the trustees an official undertaking in such sum and with such sureties as the board shall direct and approve. The treasurer need not be a member of such board."


Tags: Legal Poems, Liability, Public Libraries

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