Resource Library

Interns, Coverage and Risk Management

Be Prepared

Date: March/April 2015

Interns are welcome additions to the staffs of MCIT members; many work during the spring and summer. They often provide much needed assistance during these busy months to help members complete projects. Interns benefit by gaining valuable work experience, as well as earning credits from their educational institutions. Despite the benefits to both parties, it is important that members also consider the exposures that accompany the addition of interns to their workforce, how MCIT coverage may apply and how to best manage the risks unique to interns.

Liability Coverage

Interns meet MCIT’s definition of a “covered party.” Therefore, MCIT will respond to liability claims on behalf of the member and the intern when the intern is acting within the scope of his or her duties for the member. The complete definition of “covered party” can be found in the Liability section of the MCIT Coverage Document, Section VI, Definitions.

Property Coverage

Personal property belonging to an intern may be eligible for MCIT property coverage, depending on the property in question. Contents coverage is available up to a maximum of $5,000 per loss occurrence if the property is unscheduled, providing the property is being used for the benefit of the member. For example, coverage can extend to loss or damage to an intern’s laptop computer if the member has approved its use as necessary to the intern’s duties and has a work-related purpose. Any resulting claim would be valued on a replacement cost basis, subject to the member’s property deductible. Higher limits of coverage are available if the property is added to the member’s property schedule.

Coverage may also be available under MCIT’s electronic data processing coverage if the intern’s electronic personal property will be used at locations other than a member’s scheduled building. Members should discuss coverage options with their risk management consultant.

Automobile Liability and Physical Damage Coverage

A fundamental rule of automobile liability is that coverage follows the vehicle. MCIT’s automobile coverage responds to claims caused by interns while driving member-scheduled vehicles for a work purpose. Both liability coverage and physical damage coverage would apply to any scheduled vehicle if involved in an accident when an intern is driving.

The intern’s personal auto insurance must respond to claims that occur while he or she is driving his or her personal vehicle even when used while performing work for the member. For claims that exceed the intern’s liability limits, the member’s hired and nonowned automobile liability coverage would provide coverage consistent with statutory limits as provided in Minnesota Statutes, Chapter 466. MCIT provides no physical damage coverage for an intern’s personal vehicle.

Employee Dishonesty and Faithful Performance of Duty Bond

Generally, the type of loss that comes to mind for employee dishonesty bond coverage is theft of money. However, this coverage also extends to theft of tangible property and faithful performance of duty. Regardless, to collect on this coverage, the member must prove it has suffered a financial loss and the person responsible for the theft must fit the definition of an employee, which is a “person in [a member’s] service and for 30 days after termination of that service whom [the member] compensate[s] directly by salary, wages or commissions.” A paid intern fits this definition of an employee.

Interns who are not paid do not meet the definition of an employee. As such a member is not covered by the bond when a claim arises from an unpaid intern. This lack of coverage should be a consideration when an unpaid intern is handling money or property owned by the member.

Workers’ Compensation Coverage

Minnesota Statutes, Section 176.011, Subdivision 9 defines “employee” as any person who performs services for another for hire.

An intern paid a wage or salary is considered an employee and is generally eligible for workers’ compensation benefits if he or she is injured within the course and scope of his or her internship.

An unpaid intern receives no remuneration and is generally not eligible for workers’ compensation benefits. Minnesota Statutes, Chapter 176 has exceptions for interns who work in law enforcement (e.g., posse team, dive team), emergency medical technicians and emergency management.

Even when interns receive no remuneration, an argument might be made that they do receive a benefit, namely valuable work experience and educational credits. This would be a question for the courts to answer. In examining this issue, the court would likely consider who directs and controls the intern’s work activities. Therefore, it is critical that the member clearly communicates to interns their positions within the organization and to register them as interns with the departments in which they are interning or the person in charge of interns (if the member has one).

MCIT recommends having a contract with the educational institution that clearly outlines the relationship of the intern to the member and the educational institution. In some cases, educational institutions provide coverage for interns if they are injured during their internships.

Loss Prevention and Risk Management Recommendations

Following is a list of issues members should consider when looking to offer internships, as well as strategies to help mitigate exposures to loss.

  • Negotiate a contract with the educational institution that outlines the responsibilities of the intern; defines the duration of the internship; specifies what (if any) wage, salary or stipend will be paid to the intern and who is responsible for the payment; and details which party is responsible for the intern’s workers’ compensation coverage. For more details about transferring the risk of interns, review the MCIT Resource “Interns, Exposures, Coverage and Risk Management” available in the Resource Library at MCIT.org.
  • Complete reference checks on interns.
  • Maintain a file for each intern that includes essential information, such as name, address, telephone numbers, emergency contacts, date of birth.
  • Register unpaid interns with appropriate internal personnel.
  • Advise interns that they are responsible for their own personal property if damaged, lost or stolen unless the member has approved it for use as part of their job duties. Schedule interns’ property with a value in excess of $1,500 when appropriate.
  • Obtain a copy of interns’ driver’s licenses if driving is part of the interns’ duties.
  • Obtain proof of personal automobile insurance if interns are using their own vehicles for member business. Advise interns that they are responsible for liability and physical damage losses to their own vehicles.
  • Remember that employee dishonesty and faithful performance of duty bond does not apply to unpaid interns if they are expected to handle money or property.
  • Once interns are part of the workforce, members should consider the following items:
  • Ensure interns are properly trained on the expected job duties, which may mean developing training programs unique to the work they will perform (e.g., office setting, highway, law enforcement, SWCD).
  • Properly equip interns according to the type of work.
  • Invite interns to training meetings, such as safety meetings, first aid/CPR courses, that will help them perform their assigned activities.

If members have questions concerning interns, they are encouraged to contact their MCIT risk management consultant toll-free at 1.866.547.6516.

MCIT coverage is always subject to the terms, conditions, limitations and exclusions of the MCIT Coverage Document.

Originally published March/April 2015 MCIT Bulletin

The information contained in this document is intended for general information purposes only and does not constitute legal or coverage advice on any specific matter.