According to the Nonprofit Almanac, there are an estimated 2.3 million nonprofits operating in the United States. Many lack the proper liability coverage they need, providing an opportunity for independent agents to step in, provide guidance and be the hero.
“Non-profits often view management liability coverages as luxuries, but they’re very important in protecting the balance sheet,” said Steve Cohen, management liability senior underwriting manager at Victor O. Schinnerer & Co., Inc. in Chevy Chase, Md. “Typically, smaller charities and foundations simply don’t view these exposures as meaningful, as they feel their charitable nature creates goodwill internally and externally; this simply isn’t the case. Everyone is a potential target, and brokers should be well-versed in the spectrum of exposures to discuss with their clients.”
Riley Binford, CIC, executive vice president at Charity First Insurance Services in San Francisco, said his company specializes in dealing with smaller- to mid-size nonprofits that are not necessarily sophisticated when it comes to their insurance needs.
“Probably the biggest misconception we see is nonprofits not fully understanding the difference between Directors & Officers Liability and General Liability. Agents and brokers have an opportunity to sell both if they would clearly differentiate between the two,” Binford says.
Here are two quick examples of how market specialists can partner with agents to solve these kinds of problems for nonprofits:
- Riley Binford: “We recently looked at a public entity spinoff that was set up to coordinate the municipality’s various nonprofits that were providing services within its city limits. The municipality had a large retention and they did not want to subject this spinoff off to the retention. The agent was having a very difficult time finding coverage because the city had not officially separated this spinoff and it was really still in the name of the municipality. We strongly suggested the city take the time to establish a separate 501(c)3 for this organization with a completely separate board. Once they did that, finding coverage was no longer a problem.”
- Steve Cohen: “With the current market we are seeing, there is a move to non-renew accounts with any claims activity whether there was a payment or not. Most of these accounts can easily find new coverage, but those with particularly significant claims are finding it difficult to secure coverage. Recently we have been able to help two brokers secure coverage for insureds who had been involved in claims that we felt would never happen again.”