When you’re running a nonprofit, chances are you’re not an insurance expert, which can make finding your way through the complex world of insurance feel very intimidating.
Your nonprofit and its entire mission can hinge on your understanding of your insurance policy’s terms and conditions, whether you keep accurate records and documentation, and if you know when to update your coverage throughout the year.
No pressure, right?
Luckily, you don’t have to do it alone!
In this article, nonprofit insurance experts share their tips to help you better navigate your insurance journey!
Understanding Your Policy Terms and Conditions
Without years of experience in the insurance business, it can be difficult for most people to make heads or tails of complex insurance documents.
So, how can you understand your policy’s terms and conditions?
Enter your insurance broker — your personal guide to all things related to insurance.
“When it comes to insurance for your nonprofit, a good broker is your best friend,” says Melissa Dalske, chief experience officer for Nonprofits Insurance Alliance (NIA).
One of your broker’s most important jobs is to help you understand your insurance documents so you can make clear and informed decisions about your nonprofit’s insurance coverage.
If you have any questions or need anything clarified about your nonprofit’s insurance, your broker should be your first call.
Keeping Accurate Records and Documentation
If your nonprofit serves the community for long enough, eventually an incident will happen that will require your nonprofit to make an insurance claim.
Whether it’s a lawsuit or just a report of an injury, or allegations of negligence or wrongdoing — it’s important to ask up front, are you ready for that claim? Your nonprofit and your reputation could depend on it.
When an incident happens, there’s a few simple things you can do to help protect your mission: Be prepared, keep records, and document everything.
Keeping good records can benefit your nonprofit, Dalske says, both with your insurer as well as in court or litigation.
The documentation your staff keeps every day about the timeliness and completeness of their work in compliance with your regulations and best practices, could be just the sort of information your insurance company needs to be able to mount the best possible defense for you.
Also, any records you keep after an incident happens, document the process you followed to prepare your team to respond appropriately and keep a bad situation from getting worse, including:
- Documentation of the incident
- Date and time
- Parties involved
- Procedure(s) in place
- Did staff follow those procedures?
- Actions to remedy the situation
“Those documents and those records of what actually happened on that day and how you responded to it are really your saving grace,” Dalske says.
“They not only assure you are doing your best for your clients, but they help you get through a lawsuit, and they can help your insurance company settle for less than it could have potentially cost — because you have the right records in place.”
How many details do you remember from something that happened five years ago?
Your nonprofit could face a claim years after an alleged incident takes place, so relying on your memory alone is a gamble no one should take.
This may be unfair, but the truth is, your own records are your best defense. And not just records you keep when an incident happens — but every day.
If you’re able to produce detailed records of a day in question, years later, that’s strong evidence in your favor. If you’re able to point to the days and months around that day as well to show that your team follows your practices and procedures, that’s even better.
If records are missing, however, then it puts the question in everyone’s mind whether something was done improperly.
“That just shows another level of negligence,” Dalske says — a bad look for any organization, but it’s especially bad for a nonprofit.
“There are a lot of reasons to do the right things up front when something bad happens,” Dalske says. “[What happens when] you’re working in the community, and something goes wrong, and it turns out you could have done more and didn’t?”
Without your community’s support, your nonprofit is not going to last long. And a quick way to lose that support is to have your nonprofit’s reputation associated with allegations of negligence, abuse, or other wrongdoing.
Once that negative connection is in the public’s consciousness, you’ll find it extremely difficult to raise funds, recruit people, or get any sort of community participation in your mission.
Keeping good records is how you can prove that, even when bad things happen, your nonprofit is committed to doing right by your community, your people, and your mission.
Reviewing and Updating Your Policies Regularly
You renew your nonprofit’s insurance policy once a year, but your nonprofit’s programs and people — even your entire mission — can change dramatically in the months between. You may find yourself with too much coverage…or not enough.
A change in address, opening or closing a new location, purchasing or selling a vehicle, starting a new community program, hosting a large event, switching from volunteers to a paid staff — these are just a few of the changes that could affect your nonprofit’s coverage.
When those changes happen, can you be sure that your nonprofit’s insurance still fits?
Fortunately, the answer can be easily found with a check-in call with your insurance broker whenever you’re considering changes or something new at your organization.
“Be as communicative as possible with us,” says Kevin Cothron, president and CEO of TCG Insurance Programs, a Florida-based insurance broker firm specializing in nonprofit clients.
Cothron stressed that it’s important for nonprofits to check in with their broker, not only to make sure that your coverage matches your programs, but also to make sure you’re only paying for insurance that you need right now — and not for something your nonprofit no longer does or might like to do someday.
“I want you fully insured so there are no problems,” he says. “But I don’t want you paying for insurance you don’t need.”
A common pitfall, Cothron says, is that many nonprofits unintentionally leave themselves at risk and underinsured by mistakenly assuming that one basic insurance policy — General Liability or Directors and Officers, for example — equates to a catch-all coverage that covers every aspect of their operations, and get burned when something happens that isn’t covered.
“[Brokers] want to make sure you’re protected,” he says. “Don’t assume that, just because you have an insurance policy, that anything you do is covered — because that doesn’t exist.”
A mistake small, new nonprofits make is thinking that they just need D&O and they don’t understand that doesn’t cover most situations where someone gets injured.
Dalske echoed Cothron, encouraging nonprofits to be certain that they’ve got the coverage needed before making changes.
“Any time you have an organization-changing event, it’s a good time to double-check and make sure your coverage is there and it’s doing what you need it to do,” she says.
“It’s almost like a life change: When you get married, get divorced, or have kids and you look at your life insurance and your health insurance policies — it’s the same principle. You need to look at your policy and make sure it will still work for what you’re doing.”
Dalske warned that, if your policies aren’t updated to match your nonprofit’s changes, you run the risk of finding out that your insurance doesn’t cover a particular part of your operations — at the worst possible times.
“If you don’t report that new address to your insurance company, there is no coverage at the new location,” she says. “If you buy a vehicle, don’t report it, and get in an accident, there may be no coverage for the accident.”
Conclusion
No one has time to think about insurance on a day-to-day basis — especially when you’ve got your hands full keeping your nonprofit open, staffed, and serving the communities that count on you.
But, with a little bit of time, communication, and preparedness, you — with the help of your broker — can protect your mission and serve your community with confidence, knowing that your insurance will be there for you when you need it. It’s definitely worth the investment.
