Nonprofits are different in many respects from other businesses, and one of those areas is risk and the need for nonprofit insurance coverage that protects the unique needs of the organization. In fact, not too long ago it was challenging and sometimes impossible for nonprofit organizations to obtain adequate coverage. That has changed as insurance companies now view nonprofit organizations as a specialized sector of the overall business community, along with the specialized insurance and risk management needs these organizations have.
Nonprofit Insurance Coverage Competition
Rather than try and “fit” nonprofits into standard business policies, insurers now offer coverage that is designed specifically for this market. Additionally, there are many more options available to nonprofits today than 10 or 20 years ago, so obtaining general liability, auto, property and professional coverages are all relatively simple. Even better, because competition has increased considerably, costs are quite stable, and no surprises typically lurk at renewal dates.
All of this is wonderful news for nonprofits, as insurance companies now understand their business models better, and are able to offer the types of coverage that are unique to each organization. For instance, business policies frequently cover theft by employees, but do not mention volunteers. Also, exposure that nonprofits must cover just do not exist in most general businesses, and standard policies don’t cover things like sexual abuse or a blanket coverage that might be overlooked by an insurance agent or broker without significant nonprofit experience.
Insurance and Risk Management
Nonprofits once enjoyed the protection of charitable immunity, but that is no longer the case in most states; today only three states provide liability protection to each volunteer. Plainly, more coverage is needed to protect nonprofit organizations from lawsuits that can drain needed resources.
Though a general liability policy can protect basic exposures, like the property or simple operations, it can fall woefully short on most accounts and leave the nonprofit open to lawsuits for non-covered parts of the organization. Similarly, a directors and officers (D & O) policy is extremely limited, and will not protect against most employment-related lawsuits. Each nonprofit organization needs to take a candid look at how they can reduce their risks to save the group money while affording them the appropriate coverages.
If your nonprofit does not yet have a risk management program, it would be wise to speak with your insurance broker for suggestions on designing and implementing one. Risk management can save you money on insurance premiums by reducing your risk levels; your Pittsburgh insurance brokers can show you ways to modify or avoid activities which lead to higher exposure for potential lawsuits. These programs help your nonprofit be seen as a good risk, and allow you to buy only what insurance you need at affordable rates.
Buying insurance for a nonprofit organization is not a simple task; it involves a thorough review of all of your resources. Those can include property, capital, employees and volunteers, along with everything that your organization does. All of these things have some inherent risk built in, and the list of things that can possibly go wrong can be extremely lengthy. Here are just a few situations to consider – disgruntled employees, discrimination or sexual harassment, injury to clients, vendors or members of the public that visit your premises, injured volunteers, auto accidents, injuries or damages during fundraising events. Luckily, these types of events are not common, but when they do happen, they can be quite costly without the proper insurance coverages in place.
Purchasing Nonprofit Insurance Coverage
Only after examining all of your exposures and reducing as many risks as possible will you have a good grasp on exactly what types and amounts of nonprofit insurance coverage your organization needs.
Though nonprofit insurance coverage is no longer difficult to find, it can be confusing both for the nonprofit and for an insurance broker that is not knowledgeable and experienced in working with the nonprofit market. Each nonprofit is different, with different exposures, different levels of risk, and different budget constraints. Because there are a wide range of insurance services available, a broad range of premiums can be charged for them. This is where Pittsburgh insurance brokers can rise to the task of finding coverage tailored to your group’s specific needs, at a price you can afford to pay.
We realize that all of this might seem overwhelming, but a broker experienced in health and human services and nonprofit agencies can walk you through the process and explain everything in laymen’s terms. One of the best Pittsburgh insurance brokers – Allied – has extensive experience in this industry segment, multiple A-rated insurers to offer, and a range of coverages available that can adequately cover all of your risks.
*Allied does not deem this blog entry as a complete and thorough listing or overview of the above topic, and does not recommend it be primarily relied on. It only highlights some common issues and resolutions. For a thorough overview, please contact Allied’s Risk Engineering Division.