Here's the way it should work - when you volunteer, the organization you volunteer for should carry liability insurance that covers you in the event of a mishap resulting in a lawsuit. Sadly, not every organization has the money or insight to take out such a policy. What can you do to make sure you don't end up like the chaperon of a cheerleader group's trip to Hawaii, who just came out on the short end of a $700,000 verdict in a lawsuit brought by the parents of one of the cheerleaders who died in a fall from a hotel balcony?

Here are some suggestions:

1. Confirm that the organization carries liability insurance that also covers volunteers for at least $1 million, and ask to be named as an additional insured on the policy.

2. Talk to your insurance agent about buying your own personal liability policy. Such policies are relatively inexpensive (I used to carry $1 million when I organized a large bicycle tour, and the cost was minimal compared with the potential for a lawsuit.) Confirm that your auto insurance covers you while using your vehicle as a volunteer, including carrying passengers.

3. Don't do anything as a volunteer that you perceive as needlessly risky, such as run a rapid without scouting it first, send children on a night hike on the berm of a busy highway, or use white gas to start a fire, even if directed to do so by one of the organization's staff. If you witness an illegal act, report it to the person in charge. Err on the side of caution in medical situations.

4. Document for yourself any incidents that might bring about a lawsuit, and do it as soon as possible after the event.

5. Don't stop volunteering. The actual potential for such a loss is quite small, and the rewards you'll derive from giving of yourself is enormous.

I know many people who have opened small businesses, offering consulting services of all kinds: computers, human resources, advertising, business coaching, accounting, legal services, web design, and more. No matter what type of "consulting" you do, you need liability insurance.

You're sitting there saying, "What? Me? Liability? For what???" The sad truth is that our society has gotten to a point where people are suing anyone and everyone, even if it's not your fault. Do you want to risk a lawsuit against your small business without the benefit of insurance? Do you think you could really cover all of the legal fees? Are you in a position to pay a settlement to a plaintiff and still keep your doors open and food on your table?

The fact is that we, as consultants, can and do make mistakes in our work. Liability insurance is a necessary evil to protect ourselves and our families in the event that we make a mistake (or are accused of a mistake). For many types of consultants, liability insurance isn't even all that expensive, costing from $1,000 to $2,500 for a year of coverage. Of course, the premium will depend upon the type of work you're doing and the bells and whistles you want on your policy. But the peace of mind offered by such policies is definitely worth the price tag, and a "must have" for all small businesses.

Tracy L. Coenen, CPA, MBA, CFE performs fraud examinations and financial investigations for her company Sequence Inc. Forensic Accounting, and is the author of Essentials of Corporate Fraud.