The non-profit is incorrect. They appear to think that Texas' Charitable Immunity and Liability Act means that they are somehow exempt from all liability. That is simply not the case. The law is not a blanket exemption. There are many exceptions and loopholes.
The law only limits recovery for bodily injury and property damage. It does not limit other potential claims, such as libel, slander or discrimination. The law does not apply to the duties or liabilities of a board member or an officer to the organization or its members. Nor does the law prohibit plaintiffs from filing suit.
For example, the immunity provided by the statute and the limits on liability do not apply to an act that is intentional, willfully or wantonly negligent, or done with conscious indifference or reckless disregard for the safety of others.
The liability of the organization and its employees is limited to $500,000 per person and $1 million per occurrence for bodily injury and $100,000 for property damage. The limitation applies only if the organization carries liability insurance for the amounts stated. The requirement can be satisfied with a combined single limit of $1,000,000.
Furthermore, volunteers are personally liable for damage or injury arising from the operation or use of a motor vehicle, to the extent insurance coverage is required by the Texas Motor Vehicle Safety Responsibility Act, and to the extent of any existing insurance coverage applicable to the act or omission.
Thus, it is very smart for you to keep the clause in the contract.
Also, just to be clear, your question stated both Texas and Puerto Rico as the states and so I assumed in answering that the client is in Texas and that Texas law applies. If this is incorrect, please let me know.
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