Newsletter Articles

iNews Articles 2010

Wellness Awareness

Glossary of Terms

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Nonprofit Resources is a wholly owned Subsidiary of Colorado Nonprofit Association

I have insurance for my nonprofit. What do I do now?

Someone from your organization will need to take responsibility  for the insurance program.  Typically, if this is a small organization, the Executive Director might be in charge, and for a somewhat larger group, perhaps the CEO,  financial officer or human resources director.  A very large organization may require a full time risk manager to coordinate activities.  No matter what the size, the same principles apply:  common sense, educated projections about your future activities and sound management practices.  Be sure that the insurance program manager for your group is in tune with the board and senior management as well as the entire organization. If you are the manager for your group, you should determine the organization’s exposures and then develop a risk control program based on those risks. 

You will organize your insurance records , keeping all of your policies and relevant correspondence.  Maintain each policy, along with its correspondence, in separate file folders or a similar filing system, and  never write on your insurance policies as they are contracts.  Label the files with the Policy Name, Policy Dates and the Carrier.  Create a new folder for each policy year, and keep all endorsements (policy changes) with the appropriate policy.  These endorsements are part of the contract.

Policies should be archived.  A claimant may file a claim years after the incident occurred and the policy expired, and there is the possibility of a claim being re-opened.  You should keep any liability policies permanently.  This is particularly important if your nonprofit works with children, provides health care or does any other long-term type of activities.  All other policy types should be kept for seven years. 

You almost certainly will be asked to furnish a certificate of insurance at some time.  Typical requests occur when you hold an event in another venue, or if your landlord wants to be sure you have insurance.  The requesting party should have some interest it is trying to protect.  This is a document that delineates the types of insurance policies written, policy dates, limits and the insuring company.   It is commonly referred to as “proof of insurance”.  Your insurance agent can prepare this document for you. 

You may want to request a certificate from another party when you want to confirm that they have insurance.  You will want them to have insurance so that if they cause a loss, you will know that the other party has a source of funds from which to pay for the loss.

Every nonprofit enters into other contracts such as copier leases, office-space leases, or contracts for professional services.   Some contracts require that the lessee produce a certificate of insurance showing they have adequate loss coverage on their policy.  Make sure your insurance program meets the agreement’s insurance requirements.  Some contracts stipulate that the nonprofit maintain certain limits during the terms of the agreement.  If the contract stipulates you will carry $2 million liability coverage and you only carry $1 million, you are in breach of contract.

As the insurance manager you will have the responsibility (and you are obligated) to report a loss.  Once notified of a loss, you can convey the information to your insurance agent.  Every policy requires that you report a claim in a timely manner – the bigger the loss, the more important it is to report quickly.  It is best to inform your agent of any kind of loss, even if it does not result in a claim right away.  Insurance companies appreciate being forewarned about possible claims. 

After you have reported the claim to your agent, set up a claim file and retain all information and documentation pertaining to the incident in that file.  Document all of your conversations with the various parties involved.

If your nonprofit is named in a lawsuit, you should take the following steps:

• Make a note of how you were served with a summons and answer within the time frame noted.
• Notify your insurance agent immediately.
• Do not alter your records.
• Do not talk about the case except with your insurer or the defense attorney hired to represent your organization.
• Cooperate in obtaining all documents and records.
• Do not overstate or understate the facts.
• Do not let politics or emotions prevail over good sense.
• Resolve to take it seriously, but not take over the life of your nonprofit.

You may request a helpful booklet called “Lawsuits” published by the Alliance of Nonprofits.  We would be happy to send you a copy.  And rest assured, your Account Manager at Nonprofit Resources is always ready and willing to help you with any claims issues.