Property coverage is purchased to protect the physical assets you own or lease such as buildings, office equipment, computers, furniture, etc. When considering property coverage, it is important to have a thorough inventory of all physical assets, and to make sure the property is accurately valued and adequate coverage limits are purchased.
Coverage is available on a Special Form. Business Income coverage and Extra Expense coverage are included.
Enhanced Coverage of Nonprofits OWN Businessowners Property (NIAC)
Summaries of key features only. Actual policy language will differ.
- Coverage is written on “special” modified BOP form
- Deductible amounts of $250, $500, $1,000, $2,500, $5,000 and $10,000 available
- Low minimum premium
- Employee/Volunteer Dishonesty Coverage available on a specified limits basis (limits up to $500,000)
- Business Income and Extra Expense restoration periods – 18 months*
From the Claim’s Files
Fire Loss:
Fire broke out in a storage room and investigation determined that the faulty wiring in a coffee maker was the cause of the fire. The total cost of the damages to the nonprofit’s business personal property, relocation expenses and business income loss was more than $100,000. Electrical appliances must be regularly checked for faulty wiring and should not be operated in a closed environment such as a storage room. Fire is the leading cause of property losses and accounts for 73% of dollars paid.
Embezzlement:
A payment clerk manufactured phony invoices to a pre-approved vendor with whom the clerk had an arrangement for sharing the profits. An annual financial audit uncovered the crime, and the guilty parties were convicted, but not before the employee embezzled $281,000. Good financial controls would not allow an arrangement to pre-approve vendor payments. Best practice would be for each individual invoice to be approved by one person, a second person would issue the check (but not have signature authority), and a third person would review and sign the check. In a small nonprofit the approver may also be the check issuer, but should not have signature authority.
Laptop Computer Thefts:
Every month we receive four to six claims for theft of laptop computers. Although the average laptop replacement cost is $2,600, the cost of replicating data can be significant, and the potential for claims of identity theft cannot be understated. Our data indicates that only 60% of laptop theft claims occur on the nonprofit’s premises where a break-in can be verified. Another 30% are missing laptops at a nonprofit that were left unattended with no sign of break-in. In those cases, the property coverage will not apply. The remaining 10% occur away from premises, usually as break-ins to vehicles. Physical locks, cables and the like should be a basic risk management consideration. While encryption of data is expensive and not feasible for most nonprofits, robust password protection should be required.