Nonprofits Insurance Alliance

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Winter is Coming – Property Checklist

The holiday season is upon us and with all of the stress generally associated with this time of year, you probably haven’t given much thought to frozen pipes, roof collapses, ice dams, or any of the other property maintenance issues that can lead to water damage. However, as illustrated in one of our recent blog posts, water property damage can be costly, and is often not covered by insurance. Given that there is an increased risk of water damage this time of year, it’s vital that your nonprofit plan and prepare for the upcoming winter season.

If you haven’t read our blog on water damage claims, you may not be aware that typically, property policies exclude water damage unless something else is accidentally or suddenly damaged first, such as with wind or fire. For example, let’s say the gutters on your building are rusty and water is not being properly diverted off your roof. Then a rainstorm comes along and pushes water through the weakened area into your roof and water leaks under the eaves, into your walls, and starts to pool. Because this damage is due to improper maintenance and not a sudden, unforeseen event, it is not covered by your insurance.

Whether it’s a slow leak, a frozen pipe, or a full-fledged flood, water damage can have a negative effect on your organization and its ability to provide services to the community. Not only can water and moisture damage the interior of your building, but it can also damage or destroy fire protective equipment and electrical equipment. Another unforeseen issue that is more likely to arise in the cooler, wetter months as a result of unwanted water or moisture is mold. Like most water property damage, mold damage is generally not covered by insurance, as it is considered preventable with proper maintenance.

While every building is unique, each is at risk for water damage, whether from a minor roof leak, improperly maintained plumbing, or a violently destructive storm. Before the weather takes a turn, give your premises a good lookover for early signs of damage or wear-and-tear, including damaged flashing, gutters and drainpipes, or broken windows. Identify and repair all leaks and cracks in windows, doors, and exterior walls, as well as in the building’s roof, foundation, plumbing and HVAC systems.

A properly maintained building is only part of protecting your organization’s facility from water damage. Also be sure to check all drains, gutters and down spouts for leaf litter, debris and other clogs or obstructions that cause water to collect or travel toward a building. Remember, standing water is a tell-tale sign that water is not draining properly. As a precautionary measure, also consider labeling your water shut-off valves clearly so that they are clear and noticeable, in case of an emergency plumbing situation. Repairing damage early can prevent more extensive damage from winter weather conditions.

Here are links to a few resources from the Insurance Institute for Business & Home Safety (IBHS) for your reference:

When #MeToo Comes to the Nonprofit Workplace

It’s hard to ignore the plethora of revelations of sexual harassment incidents involving well-known public figures being revealed in the news recently.

It’s also difficult to ignore the grassroots social movement that resulted – the #MeToo campaign, originally started by consultant, blogger and advocate Tarana Burke over 10 years ago, and recently popularized with a tweet by actress Alyssa Milano that garnered more than 35,000 direct responses on its first day. From there, the hashtag quickly spread across multiple social media platforms and grew immensely in participation, with individuals all over the world chiming in to share their stories of harassment and assault, or simply posting #MeToo. To say the trend is viral is an understatement – people are speaking up, and they’re doing so publicly.

What you may not know is that the number of harassment complaints nonprofits have been receiving has increased as well. These complaints run the gamut from anonymous emails reporting decades old alleged transgressions to the reporting of current serious ongoing harassment of current employees by their supervisors. Sexual harassment is a serious issue and it is incumbent upon every nonprofit to do what it can to minimize the risk of these types of incidents from occurring.

At the Nonprofit Insurance Alliance Group, we have many free tools to assist our members in addressing these risks. The following resources are available to our nonprofit members when faced either with a current complaint of sexual harassment in the workplace, or to educate your workforce in mitigating the potential risk of sexual harassment becoming an issue.

  • Free recorded webinar on Preventing Sexual Harassment and Abuse Conduct in the Workplace, which can be accessed
  • Free recorded webinar on Conducting Internal Investigations, which can be accessed
  • Members with a current Directors and Officers policy (which includes Employment Practices Liability) can take advantage of free unlimited Employment Consultations. Labor & Employment Risk Managers (LERMS) can assist members in understanding best practices for establishing a harassment free workplace, including sample policies and recommended training; the processing of a complaint of harassment, including internal or external investigation and assessing risk; and possible steps to remedy the situation. Information on how to request a consultation can be found here.
  • Free Sexual Harassment Prevention Training for Supervisors, available for nonprofit members in Connecticut and California where such training is legally mandated. Additional information can be found here.
  • Training brochures for nonprofit staff working with youth, entitled “Supervision of Children and Teens Never Includes Sex,” which is available

In addition to these resources, you should confirm with your nonprofit’s insurance broker that you have sufficient Employment Practices Liability (EPLI) insurance coverage under a Directors & Officers (D&O) insurance policy, and/or Improper Sexual Conduct (ISC) coverage, if you are exposed to risk in this area.

Making these tools available should help create a healthy and respective environment at your nonprofit, minimize the likelihood of a #MeToo incident from occurring, and assist you in responding if such an incident does occur.

From the Claims Files: Woeful Website Wording

The chances are that your nonprofit has a website. In the digital era, creating and maintaining a website is almost unavoidable. It explains your nonprofit’s mission and programs to current and potential supporters, solicits donations, and provides additional information on events and fundraisers. The fact of the matter is, your website is the face of the organization.

Given the importance of your nonprofit’s website, it shouldn’t be a surprise that choosing your wording with care and caution is a must – so that visitors are not only engaged and interested in your nonprofit, but also leave with a clear and accurate understanding of what your organization does. Without clear language, individuals in the general public may misconstrue what it is your organization does, and as a result, could end up suing for damages. Unfortunately, that’s exactly what happened to one of our nonprofit members.

The Claim

The nonprofit runs a halfway house for men with dual substance abuse and psychiatric issues. Their clients come into the program after being discharged from hospitals, to make sure they’re stable and can establish both a job and a place to live. One such client, who we’ll call John, entered the program to manage and treat both schizoaffective disorder and an addiction to methamphetamines. During the intake process, John told the organization that he was single and had no spouse – this turned out to be a lie and while John was in treatment, his wife filed for divorce. Despite this, John’s condition was stabilized, he found a job and an apartment, was discharged from the program, and by all accounts was doing well.

After seeing how well things were going for John after he was discharged from the program, his wife tried to re-enter the picture and showed up to his new apartment to reconcile. As the couple was about to become intimate, John’s wife discovered that he had a visible STD. It was subsequently discovered that John had been having an affair with a staff member at the nonprofit, and they were now in love.

The staff member was let go as a result, but John’s wife sued the nonprofit for emotional damages caused by the relationship. Initially, it was deemed that she had no standing in court as she was not a client of the nonprofit, so the judge dismissed the claim. However, she then amended her complaint based on the fact that the nonprofit’s mission, as listed on their website, was to help addicts and their families. The inclusion of families in the nonprofit’s mission meant that the wife could be included under the umbrella of who is being served by the organization.

In the end, it was ruled that the website’s text did not mean that John’s wife was owed anything by the nonprofit, and the suit was ultimately dismissed. However, this claim had the potential to cause of lot of problems for the nonprofit, had the court agreed with the wife that the word “families” meant she was a client of the nonprofit organization.

Lessons Learned

Although this claim did not result in liability for the organization, it highlighted the potential that words used in nonprofit marketing materials, such as websites, have the potential to create legal liability. Words describing services can be alleged to be an implied-in-fact contract or create a legal relationship which can create a legally-enforceable duty to act in a certain manner. So what’s the takeaway from this nonprofit’s story? Your organization’s wording, on its website and elsewhere, is critical. For that reason, carefully examining what you’re communicating and how, is essential – not only to ensure it’s accurate and engaging, but also to ensure that you’re not opening your organization up to unanticipated liability. Legal review of such materials or disclaimers may be appropriate risk mitigation tools for those nonprofits in highly regulated industries, such as health care.

Claims You Won’t Believe: Contraception as Contraband

Reproductive freedom and the right to privacy, for minors especially, can be murky territory, with laws differing from state-to-state. In fact, only 26 states and the District of Columbia currently allow minors aged 12 or older to receive contraceptive services without parental approval. But how do these rights work when there’s no parent or guardian involved? What if contraception is legally permissible for minors in a state, but another party steps in and assumes the role of the guardian in making these decisions regarding their right to reproductive health care? One Nonprofits Insurance Alliance Group member in California found out the hard way — read below for their experience.

The Claim

A California nonprofit group home for foster teens was sued by current and former residents asserting a violation of their right to privacy and a denial of their access to reproductive health care. The group home required the teens, as a matter of policy, to be abstinent in order to reside in the group home. While they had no formal policy prohibiting residents from obtaining birth control, the group home admitted taking condoms and other forms of birth control away from the teen residents and penalizing them under their privilege-earning system for possession of what they deemed contraband. The suit also alleged that access to reproductive health care appointments was restricted, and that the teens were not allowed to meet alone with their medical care provider, if requested. The teens were represented by two national, nonprofit public interest law firms that promote youth and reproductive health care rights. The lawsuit sought damages and injunctive relief, which is a court order prohibiting the group home from continuing its practices in this regard, and attorney’s fees under the Private Attorney General Act (PAGA). The suit received extensive publicity.

The lawsuit was based on a violation of the right to privacy guaranteed under Article I, Section 1 of the California Constitution, which applies to public, as well as private entities. It also alleged negligence of the nonprofit for failure to supervise, evaluate and train childcare staff to ensure that they understood the healthcare rights of foster youth as required under California regulations, which includes the right to confidentiality and access to reproductive health care. The suit also alleged failure to follow the Caregiver Resource Handbook issued by the county (which placed the teens in foster care) as it pertained to reproductive healthcare.

While the suit was founded primarily on California law, it did cite the federal case Arneth v. Gross, which determined that the right to access reproductive health care extends to minors in foster care. Under the more narrow federal right to privacy, the Arneth court found that “minors have a constitutional privacy right to practice artificial contraception absent compelling state considerations to the contrary, and this is not diminished because they are in foster care.”

Due to the risks of a large potential damage award, and negative publicity, this case was settled in mediation. While each of the five claimants received a modest settlement of $5,000, the plaintiffs sought an attorney’s fees award available under PAGA. When this issue was submitted to arbitration, the plaintiff’s attorneys were awarded a staggering $400,000.

Lessons Learned

Access to reproductive health care rights for those in residential care is highly regulated by local, state, and federal statutes, as well as the state and federal constitutions. As this claim demonstrates, impairment of those rights can be a huge risk to a nonprofit residential care provider. To avoid such a claim, nonprofits must understand the rules and laws of their jurisdiction concerning the right to reproductive health care for those in their custodial care, and adopt policies and train staff to ensure that those rights are respected and preserved.

 

From the Claims Files: Don’t Let Water Damage Run Your Nonprofit up a Creek!

A little water never hurt anyone, right? Wrong! In fact, our most common uncovered property claim is water damage as a direct result of inadequate maintenance of buildings. Whether your nonprofit owns or rents its property, water damage can be expensive and even catastrophic if not covered by your insurance policy. Because property policies typically exclude water damage unless something else is accidentally or suddenly damaged first, you may get stuck having to repair a roof, deal with damaged ceilings, and replace ruined carpet and electronic equipment, all with money that could’ve been used to support your nonprofit’s mission.

For example, if your roof gutters are plugged and water leaks into our building after a storm, insurance is not going to cover just because there was a storm and you had water damage.  Unless that storm damaged your roof and caused the leak, your insurance is not going to provide coverage. In some cases, organizations are even forced to interrupt their services to deal with repairs, depending on the severity of the damage. And while these situations are preventable with regular maintenance, some nonprofits find this out the hard way. Below are two recent Nonprofits Insurance Alliance Group claims that illustrate just that.

Claim 1: Rooftop Wear and Tear

The first claim involved a roof leak, which resulted in interior water damage to the nonprofit’s building. An investigation showed that the leak was a result of both the type of roof, which was flat with an asphalt finish, as well as a depression in the roof. Additionally, a nearby tree had a branch that extended over the roof, directly above the location of the interior water damage, which allowed for the build-up of leaves. All of these circumstances combined led to a ponding of water, which allowed the water to reach a level where it was able to seep through several cracks in the roofs tar seams and into the interior of the building. Inspection of the roof did not identify any damage to the roof itself from the recent storm, and wear and tear were determined to be the cause of the incident. Because there was no damage caused by a “Covered Cause of Loss,” the nonprofit was left to bear the cost of the internal damage, in addition to the repairs needed to prevent future leaks.

Claim 2: Blocked Drainpipes Cause Surface Water Accumulation

The second claim involved exterior drainage pipes, which overflowed, causing interior water damage.  An investigation showed exterior drain covers had been blocked by debris, resulting in the accumulation of surface water that eventually started seeping into the interior of the building underneath an exterior door. Therefore, the claim was not a result of water being backed up from the drain, but rather water not being able to enter the drain in the first place. As with the previous claim, damage caused by surface water was excluded from coverage, as the damage was caused by lack of maintenance, rather than a “Covered Cause of Loss.” As a result, this nonprofit member was also left to cover the cost of repairs.

How to Prevent This From Happening to Your Nonprofit

Every building is at risk for water damage, whether it’s a result of inadequate maintenance, such as wear and tear on a roof or old plumbing, or gutters and drain pipes that are clogged by the accumulation of leaves. Every building needs to be checked regularly for things such as damaged or blocked roof scuppers, pipes, gutters, and drains.  One question to keep in mind is: “Is there water where there shouldn’t be?”

Small leaks can also turn into huge and expensive headaches, not covered by insurance if they are not addressed promptly. This includes leaks from cracks in doors and windows, improper seals around door and window frames, poorly maintained roofs, and cracks in foundations, exterior walls, and plumbing and HVAC systems.

Proper maintenance includes routine cleaning. Your nonprofit should check all drains, gutters, and downspouts for leaf litter, debris, and other obstructions that can cause water to pool. If you’re in an area experiencing winter snow storms, be sure to clear your snow and keep your gutters and downspouts clear so you don’t develop an ice dam. Also be sure to keep an eye on your organization’s drains and gutters as snow and ice begin to melt – you may identify a smaller, unanticipated leak not detectable in warmer conditions.

Here are some general tips for preventing water damage:

  1. Conduct quarterly inspections of your property for the purpose of preventative maintenance.
  2. Schedule regular seasonal roof inspections, before and after expected rain or snow.
  3. Consider installing a solar roof pump or a sump pump. If you have a pump, make sure it’s operational.
  4. Inspect and maintain fire sprinkler systems.
  5. Identify and repair all leaks and cracks in windows, doors, and exterior walls, as well as with the roof, foundation, and plumbing and HVAC systems.
  6. To protect pipes in winter, consider setting your thermostat a little above freezing if you’re going to be absent from the premises for vacation or a weekend.
  7. Prepare and post a schedule of tasks to ensure that maintenance gets done in a timely manner.

Additionally, if you’re renting your premises, please be sure that your lease includes maintenance to be handled by your landlord, or if it requires you to conduct that maintenance make sure you do so on a regular basis.

We are a nonprofit and we insure only nonprofits, so we know that it is not easy to find the funds to conduct proper maintenance.  But, we know all too well that you either pay the money upfront for routine maintenance or pay a lot more later to clean up the damage. As your insurer, one of the things that bothers us the most is to be presented with claims that we cannot cover.  And we know that you certainly don’t want to be surprised to learn that your insurance doesn’t cover damages that could have been avoided by proper maintenance. Instead, we much prefer that you take this advice to heart so that we never have to tell you your claim isn’t covered. Remember, we’re here to help. Property maintenance is a part of good risk management, and risk management support is part of your insurance policy!

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