In many cases, non-profit organizations and social services agencies struggle to get the insurance coverage they desperately need. Standard markets are not typically set up to deal with the specialist unique risks presented by these types of organizations; non-profits require a level of expertise that many independent insurance agents simply do not possess.
This lack of expertise can lead to certain aspects of coverage getting overlooked and, as a result, the organization may go uninsured. Here are three tips for agents and brokers who want to excel in the non-profit and social services space.
Understand the need for cyber liability insurance
Authorities are seeing a sharp increase in the number of alleged cyberattacks and ransomware incidents.
In 2015, hackers exposed non-profit IRS reports at the National Center for Charitable Statistics and, in 2016, cybercriminals forced a hospital to pay a $17,000 ransom to regain access to its computer network. Cybersecurity presents a serious risk for non-profit organizations of any size, and comprehensive coverage is essential if these companies are to keep up with the evolving nature of the risk.
“This is particularly true for any organization that takes donations through a website, stores and manages sensitive data through an internal software system, or does seasonal fundraising online—as a data breach during a fundraising campaign can wreak havoc for any non-profit’s income,” explains Riley Binford, Executive Vice President at Charity First Insurance Service. “The risks are significant, but a number of non-profits and religious organizations are still not purchasing this important coverage.”
Be aware that funds transfer fraud is covered under crime policies
Transfer fraud, which can take several different forms, is a crime that non-profits can be particularly vulnerable to. In some cases, an outside party hacks into the insured’s financial account and illegally transfers money. Alternatively, the cybercriminal may accesses an executive’s email account and request an employee to make the transfer.
“Banks are usually required to compensate victims of this type of fraud when it involves a personal account, but commercial organizations do not typically have that protection,” Binford says. “It’s a common misconception that crime or cyber liability insurance policies include coverage for this type of fraud. However, funds transfer fraud is usually covered as a separate endorsement on a non-profit crime policy.”
Realize the importance for sexual abuse and molestation liability coverage
While these types of claims of relatively rare, they usually involve large and high-profile settlements, which can cause financial and reputational ruin. This type of coverage is particularly important for non-profits who serve children, the infirm and the elderly.
“General and professional liability policies rarely cover cases of sexual abuse and molestation; it usually has to be purchased separately or added by endorsement,” Binford says. “These policies can cover the defense of employees or volunteers unless they admit to the abuse or are found guilty; if that’s the case, they would be responsible for their own court costs, but the non-profit would still have coverage for defense and settlement expenses.”