Buying insurance for your nonprofit can be overwhelming and stressful. Many nonprofit leaders find themselves responsible for making insurance decisions for their organization with little to no previous experience doing so.
If this describes you, I am here to let you know: You’ve got this! And the best part is you don’t have to figure it out on your own.
At NIA, our nonprofit members work exclusively with insurance brokers and independent insurance agents, and that is by design.
Agents and brokers will work with your nonprofit to design an insurance plan that meets your organization’s needs. Once designed, they will secure insurance quotes and negotiate payment plans to best fit your budget.
Once you’ve got your insurance in place, your broker or agent will be an ongoing resource for you and your team. Whether planning a special event, getting a certificate of insurance, reporting a claim, or reviewing insurance requirements in a new contract, reaching out to your broker is the best place to start.
Whether you will need frequent assistance or will only connect once or twice a year, it is critical that you find the right broker or agent partner. Your organization is vital to your community, so selecting the right partner to protect your assets and staff is important.
Questions to ask of potential insurance brokers.
As you meet with brokers and agents, there are critical questions you should ask to ensure they are the right fit for your nonprofit:
Does the brokerage insure other nonprofits? How many?
If your nonprofit has a lot of moving parts or high-risk operations, like home restoration work or developmentally disabled clientele, it is best to partner with a broker or agent with experience in your niche of the sector.
If they do have other nonprofit clients, ask for referrals! Being the first or only nonprofit the broker works with could itself be a risk to your organization.
Having an individual that understands the insurance coverages nonprofits need will be a much more effective option.
Does the brokerage work with multiple insurance companies that insure nonprofits? And again, how many?
Ideally, when searching for insurance, you want your broker to present a varied menu of options to choose from, such as carriers, policies, limits, and deductibles.
Unfortunately, since many insurance providers aren’t clamoring to cover the nonprofit sector, you may find your options to be limited — you might only get one quote! If you do get multiple quotes, you probably shouldn’t automatically accept the first one you receive.
Some insurers practice what’s called “open brokerage” — meaning any broker with a license can submit business to them. While these insurers can provide you an incredibly fast quote, what they offer may not always be the best choice for your nonprofit.
It is important for you to ask your broker about all your options — even if the broker only has one or two markets that can assist you, you want to be sure you’re getting the best insurance coverage out there.
How are your brokers compensated?
Brokers and agents need to make a living, too — so it is completely reasonable for them to be compensated. But it is also OK for you to ask how your business generates that compensation.
- Do they collect a commission from the insurance companies they place your coverage with?
- Do they charge a fee instead of, or in addition to, commission?
- What are the fees used for?
When it comes to fees, although brokers do have the legal right to charge fees in addition to their commission, this practice can be cost prohibitive for small accounts like those of many nonprofits.
If the fees being charged don’t seem to be commensurate to the service level you need, or if the broker is charging fees on top of receiving commission, you may want to ask to negotiate them or waive them altogether.
What additional services do your brokers offer?
Large brokers and agents often have services available to their customers above and beyond placing insurance coverage. Those services vary greatly, but could include claims handling, risk management services, OSHA compliance help, or HR support.
Smaller brokers and agents may not have a diverse menu of services in-house, but don’t count them out!
Your insurance company may offer these services, and your small broker or agent can connect you with these services, which, when offered by the insurance company, are typically free or heavily discounted.
What does your brokerage like about working with nonprofit clients?
There isn’t one right answer to this question, but their answer should align with your culture and mission.
We find that brokers and agents who view working with nonprofits as a way to make a living and as a way to give back to their communities typically are a good fit for nonprofits.
Finding a broker or agent that understands your “why” and supports your mission is important.
Once you find the perfect broker or agent partner for your nonprofit, what should you expect from them?
This seems obvious, but it is critically important. The sales pitch may have aligned with your goals and needs, but the proof is in the execution.
Most insurance brokers and agents strive for a quick turnaround, and it is perfectly reasonable to ask what those guidelines are.
Will an email be responded to within 24 hours? If I leave a voicemail, should I expect a call back that same business day?
Staff contact information.
If you will be in need of frequent help — like certificates of insurance for multiple events or frequent vehicle leases — it is important to know who to contact and how.
Will the broker that sold you the insurance policies also provide service? Or is there a support staff at their office to assist?
Ask for an introduction to the people in the office you will be working with regularly. Some brokers and agents have online customer portals, making it easy to self-serve as well, so inquire about those and ask for training if offered.
Guidance through the application process.
Similar to other financial products, purchasing insurance coverage requires underwriting. The insurance companies will require documentation to offer a quote. At minimum, an application will be required, but financial statements, proof of nonprofit status and claims history may also be required.
Nonprofit applications can be lengthy, ranging from 10-30 pages. Because nonprofits are so diverse, insurance companies try to ask questions that will encompass all of that diversity. As we like to say, “If you have seen one nonprofit, you have seen one nonprofit!”
If the broker or agent hands you an application and walks away, that should be seen as a red flag. Understanding why the information being requested is important is something your broker should be discussing with you throughout the process.
Your broker should ask you about your mission, organization structure, operations, staff and volunteers, the community you serve, claims history, and future plans.
Your broker’s job is to tell your story to the insurance companies they represent to ensure you receive the most robust coverage at the best rate and to help you protect your organization’s assets so you can focus on future goals.
What shouldn’t I expect from an insurance broker?
Surprisingly often, we come across nonprofits who don’t really have the best coverage or structure to their insurance coverage but they don’t want to change brokers because they have an insurance broker who is a board member or who donates to the organization.
Our advice is to get the broker who gets you the right insurance and who works hard to make sure you get the right service. Staying with a broker for the wrong reasons can cost your organization dearly.
Finding the right insurance coverage for your nonprofit, at a rate that fits your budget, can be challenging. The good news is, you’re not expected to be an expert on the insurance industry.
That’s what your broker or agent is for: You’re going to be working closely with them, counting on them to know and understand your nonprofit, your insurance needs, your mission, your budget, your people — and represent them effectively to insurance providers.
That’s why it’s critically important that you get to know them, as well. Ask questions and use your best judgement when choosing a broker or agent — and don’t be afraid to shop around if your broker is not being responsive!
But also, be sensitive to the effort the broker is putting in on your behalf and check in with them if you get a sense your expectations for service may not be aligned.
If you’re going to trust this person to be your guide to the world of insurance, you want to be sure you’ve got the right person in your corner.
If you’re a nonprofit ready for a referral to an independent insurance broker who works with nonprofits that can assist you in getting quotes for coverage, fill out the Get A Quote form.