Eight Questions You Need to Answer About Nonprofit Insurance Coverage…

1. What are the unique coverages that nonprofits need? The majority of the insurance programs for nonprofits are pretty standard. One area that is different for nonprofits is professional liability for service providers such as occupational therapists, speech therapists, and more. Another key coverage would be sexual abuse and molestation coverage. Nnonprofit executives need to be aware that many carriers have “sublimits” on this coverage – meaning most insurance programs do not provide full coverage.

2. What coverage do agencies need for Danielle’s Law? Danielle’s Law arose out of the death claim in which a woman in a group home was in distress. In lieu of calling 911, the agency’s employees drove her for medical treatment, but she was not able to be revived. As a result of her family’s lawsuit, it is now New Jersey law that service providers are required to call 911 in critical health situations. Although the law applies to employees, not agencies, we worked with a major insurer to create an affordable defense coverage to protect both the agency and its employees from administrative and disciplinary actions related to Danielle’s Law.  We have found that many insurance agents either don’t know about this coverage or have erroneous information as to how it applies to agencies. For more details, click here.

3. What are the benefits for a nonprofit organization to work with a nonprofit insurance specialist?
Some insurers will only consider certain nonprofit accounts that meet stringent criteria for coverage. Because these carriers know we are a nonprofit insurance specialist, they give accounts we submit more consideration than an insurance agency that does everything.  In addition, nonprofits have many other insurance issues ranging from Directors and Officers coverage, which protects board members from lawsuits, to the changing reimbursement model for nonprofits in New Jersey. As a specialist, we address issues others often do not.

4. Why is Directors and Officers (D&O) insurance important for nonprofits?
Most insurance claims are not director and officer’s claims, but are employment practices liability claims. Claim activity in this area drives your costs. As directors become more involved with the agency, they become more concerned with adequate coverage, but few understand their exposure and responsibilities.  Directors are concerned with how they may be sued and what recourse they have. We have provided seminars to Boards to answer these key concerns.

5. How is the business model for nonprofits changing in New Jersey?
In the past, there has been a reimbursement model. Nonprofits get a contract from the state, and the state provides much of its funding. There is a shift towards a fee for service model, which is likely to result in many nonprofits having to compete more effectively. That brings with it insurance issues as you merge locations, personnel, and services.

6. How is the emergence of affordable housing affecting insurance for nonprofits?
As the move towards affordable housing provided by nonprofits increases in New Jersey, agencies will be dealing with serving an increase in the number of severely handicapped individuals being served. When employees manage severely disabled individuals versus those who are moderately disabled, it can result in more workers compensation claims.  The more claims you have, the higher your premiums.  This means greater attention is required for risk, loss control, and claims management for our clients.

7. Do most nonprofits have enough insurance coverage?
We think most nonprofits don’t buy enough coverage, but convincing them to buy more coverage is very difficult because they don’t see it as being necessary.  We don’t recommend more insurance for the sake of making more money ourselves.  As an advisor, we suggest that if you incur this extra expense for added coverage, in the long run you potentially will save money if you have a claim.  At Meeker Sharkey & Hurley we try to help clients understand what they are buying, why they should buy it, and support it with good service.

8. How does Meeker Sharkey & Hurley handle claims differently than a larger agency?
In a larger agency, the claims employees are on salary, so they are going to get paid whether that claim gets handled properly or not.  If the account is not happy with the outcome of the claim, their paycheck is not affected.  We have a vested interest in keeping our accounts happy, so we make sure claims get handled properly.  That means our clients have a senior level person with years of experience getting personally involved in managing your claim as opposed to handling it off to a junior person who doesn’t have the same commitment to the account that we do.  When it comes to service, it is all about performance.