Nonprofit Insurance Worst Practices
Continuing our series on “worst practices,” below is a partial list of mistakes to avoid when using nonprofit insurance.
Forgetting to get Director and Officer (D & O) Insurance for your board. Board members should have an expectation that in exchange for non-compensated board service, a basic level of risk mitigation will be provided for their voting.
Neglecting to be in compliance with your state’s rules on workers compensation insurance, unemployment insurance, or other forms of required insurance. Talk to a broker but don’t buy something you don’t need.
Failure to have a general liability policy. Every organization has risk. You can assume risk or transfer that risk to someone else with insurance. Usually, for less than $1000 a year, your organization should strongly consider getting this. Depending on size, you may be able to get a policy for under $1K a year. “Being careful” is not a strategy to avoid risk. Accidents happen. People sue. Be ready!
Failure to adequately assess your level of risk. Don’t assume you won’t be sued or that because you are a charity, people will not come after you for accidents.
Failure to understand what’s in your insurance policy. Most organizations are guilty of this. Actually sit down with your agent, company or an expert and ask good questions about what is covered and what is not.
Forgetting to pay your premiums on time. Believe it or not, organizations do this, not just individuals. Put a reminder system in place so you don’t forget key deadlines.
Buying insurance from a friend, board member, or the first person who offers it to you without doing any research. Ultimately you may decide that these policies are good, but shop around before blindly trusting those close to you.
Failing to show due diligence in financial decisions, HR decisions, and board decisions. The goal is to not use insurance. The best way to limit liability is to make smart decisions and pay attention to your organizational practices.
