Nonprofit organizations work hard to take care of the vulnerable in our communities and need to make sure they have insurance protection that takes care of them. Leaders of these organizations often have multiple roles, which means they also have multiple risks.
What should nonprofits consider when choosing insurance protection?
While the mission of nonprofits is to do good in the communities they serve, threats from rogue volunteers to cyber hackers can stop that. Nonprofits need to work with insurance professionals who understand the wide range of these exposures.
Coverage considerations include:
- Protection for everyone who serves the organization from executive management to part-time volunteers.
- Property coverage that allows for the addition of locations.
- Coverage for the unexpected, from accidents to cyber threats to client abuse.
Offering industry-leading coverage to social service agencies and nonprofit organizations to help protect those who improve our community.
Provides protection against the variety of risks associated with accidental injuries during an organization’s sponsored activities and events, in selected specialty markets.
Offering a specialized facility for D&O Liability and related professional liability coverages, including Fiduciary Liability and Employment Practices Liability, as well as Cyber Liability.
A leader in the development of long-term captive partnerships with agents, associations and groups; non-captive businesses include Elite Program and Cyber Risk.
Specializes in the placement of hull, liability and excess liability across a wide array of aviation-related risks.
Writes a wide range of surety products, including standard contract surety, commercial surety and miscellaneous non-contract surety and small fidelity bonds.
Specializes in Cyber Risk Insurance for small and medium enterprises (under $250M in revenues). Products can be written admitted in 48 states, surplus lines in 50 states.
Provides Texas Nonsubscription coverage to employers who opt out of their state’s Workers’ Compensation system.
Offers an exclusive focus on environmental insurance solutions for a wide variety of commercial customers.
Specializes in providing fidelity/crime insurance for commercial entities, financial institutions and government entities; also offers specialized products including kidnap, ransom and extortion, as well as armored care and fine art.
Specializes in providing umbrella and capacity excess products as well as primary casualty products and miscellaneous E&O that meet the needs of the commercial market.
Great American Risk Solutions partners with wholesale broker partners and program managers to write a diverse mix of specialty property and casualty business. Our team delivers industry-leading service and claim handling, thriving in a culture of entrepreneurship.
Products include Representations & Warranties (R&W) insurance, Tax Indemnity Insurance and Tax Credit Insurance.
Specializes in coverages for the marine industry, including traditional cargo, hull and liability coverages as well as pollution and complete packages combining marine property and casualty.
Offers specialized insurance solutions to clients with monoline property and inland marine coverage needs in a variety of industries.
Monoline specialist offering workers' compensation policies throughout the Western U.S.
Offers long-term solution for clients’ workers’ compensation needs by providing the resources and expertise to reduce both losses and related expenses.
A monoline provider of workers’ compensation insurance services throughout the Southeast, Indiana, Kentucky and Texas.
U.S. federal law allows 501(c)(3) nonprofit employers, public entities and native tribes to opt out of paying unemployment taxes into its state unemployment insurance pool.
Why You Should Report Loss: An Example of What Not To Do
It’s your second week on the job as the CFO of a mid-size nonprofit organization. Coming into work on a Monday morning, you grab your coffee and log into the computer. Within minutes, the bank sends you an alert that all of your accounts have been frozen. You receive several emails and knocks on the door from employees complaining that they did not get their paychecks, and the blinking light on your phone indicates a voicemail from your company’s president is waiting for you.
After a morning of phone calls and investigation, you uncover that your bank account was frozen due to a garnishment action and all of this chaos is stemming from an incident that occurred years prior.
Three years ago, a regular customer of yours tripped on a rug at your nonprofit. The client suffered a fractured leg and ankle, which required major surgery to repair. No one in your organization thought to report the incident to your insurance carrier because they were certain this customer had her own health insurance and a high opinion of your organization.
About a year after the incident occurred, the customer’s lawyer sent a letter of representation and subsequently served your organization a lawsuit. No one from your nonprofit responded to the suit, which led the lawyer to send a certified letter advising his intent to file a Default Judgment against your organization. Six months later, the customer’s lawyer entered a Default Judgment for $1.3M.
Over the next year, your organization received nine more court notices and answered none of them. You discover that no one ever sent notice to the insurance company or the agent. You decide to send notice to the Insurance Company right away, and they deny coverage for “Late Reporting.”
When you call to ask how this is possible, the claim representative clarifies what the requirements for filing a claim include. Under the Conditions section, she reads part 2.a, which says in part,
“You must see to it that we are notified as soon as practicable of the occurrence of any act, error, or omission which may result in a claim or ‘suit’.”
She emphasizes the word “may,” and explains that it was the responsibility of the nonprofit to report the incident when it occurred, even if they didn’t believe it would result in a claim.
In this case, the court ruled that there was in fact late reporting and thus no coverage for the loss. The Plaintiff is foreclosing on properties owned by the nonprofit and seeking to recover the full $1.3M along with pre-judgment and post-judgment interest and costs.
Nonprofits should err on the side of over-reporting claims. Insurance is a contract, and violating a condition of this contract could result in a declination of coverage. Nonprofits are strongly advised to avoid taking this chance and always contact your insurance company if you have a question.
By Doug Svenkerud, Divisional Senior Vice President – Claims, Specialty Human Services
The above-mentioned claims scenario is provided to illustrate an exposure you or your client could encounter. The facts of any situation which may actually arise and the terms, conditions, exclusions, and limitations in any policy in effect at that time are unique. Thus, no representation is made that any specific insurance coverage applies to the above claims scenarios.
- Specialty Human Services