Newsletter Articles

iNews Articles 2010

Wellness Awareness

Glossary of Terms

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Nonprofits, Agents and Insurance

You need to purchase insurance for your organization. But where do you start and what do you need to consider before making this very important purchase? Most commercial insurance sold to organizations is marketed through insurance professionals, or agents. Every nonprofit needs a trusted agent who will act as an advisor. An agent is interested in forming a good working relationship with both the insurance markets and with you, their customer.

Insurance agents typically receive their compensation in the form of a commission from the insurance company. Typical commission amounts are in the 8-15 percent range. Your agent should be regarded as a professional business partner and as a valuable resource for answering your insurance questions. The first expectation of your agent is that he or she will help your organization purchase adequate insurance coverage at an acceptable price. Additional services could include claims management/assistance, loss-control / loss-prevention activities, and educational resources.

If you already have an insurance program in place, you need to evaluate your current provider. If you are looking for new insurance, the following agent attributes are important for you to consider:

• Responsiveness: Does the provider return calls in a timely fashion and follow-up on other matters?

• Timeliness: Are renewal quotes provided well in advance of renewal or at the last minute? Are policies delivered in a reasonable amount of time?

• Credibility: Is the provider a credible advisor, knowledgeable about the industry?

• Commitment: Has the provider been willing to take the time to understand your operations and risks?

• Claims Handling: If you have filed a claim, did the provider assist you in managing that claim?

• Accuracy: Is the information received from your provider accurate? Have your policies been checked for errors?

Every nonprofit should give some thought to how the organization’s insurance professionals are compensated. Does the agent earn a commission on the sale of a policy or is there a fee-based arrangement in place? If the arrangement is that of compensation based on commission, there might not be an incentive for the agent to obtain the lowest possible premium, or to obtain a policy that best meets your needs.

Nonprofits have their own unique exposures and could require all or some of the coverages listed below:

• Commercial General Liability : Covers claims alleging negligence. This could be bodily injury (the organization causes someone to be hurt), damage to property of another or personal injury.

• Business Auto: If you own vehicles you will need to cover the vehicles for auto liability, and if you do not own vehicles, then you will want to purchase hired and non-owned auto liability coverage.

• Directors and Officers Liability: This policy protects the organization, its directors, officers, employees and volunteers for wrongful acts such as mismanagement of the organization.

• Workers Compensation: If you have employees, this coverage is required.

• Umbrella and Excess Liability: Provides additional policy limits for a catastrophic liability loss.

• Property: Covers office furnishings/equipment, owned buildings.

• Crime: Covers theft by employees and/or volunteers.

Next month this newsletter will address the aspects of a General Liability policy in detail.

The staff at Nonprofit Resources are all salaried – therefore no one earns a commission on a sale. Trust our staff to guide your organization in a responsive, professional and courteous manner, so that you can do the job you set out to do.