Applying for Insurance as a Brand New, Volunteer-Led Nonprofit?

how new nonprofits can get insurance

Is your nonprofit in the coffehouse and a dream stage?

My insurance agency is unique in that we can handle clients that pay nearly $1,000,000 in premium while also being able to take care of brand new start-up, shoe-string budget businesses.

Many of the start-up, shoe-string budget businesses happen to be nonprofits that flow through my department (there are about six agents that work with nonprofits here at my office).

Small Nonprofits Are Risky

There are some misconceptions about ‘risk’ among many applicants.  The assumption is that the smaller they are, the less risky they are. They are too small for claims (the opposite of ‘too big to fail’?).

Unfortunately, small, start-up nonprofits led by volunteers make underwriters nervous for the following reasons:

  1. No Experience: Lack of experience running any kind of business makes underwriters nervous. Period. It doesn’t matter if you’re starting a shoe store or a non-profit, you must demonstrate some sort of leadership or management experience to help an underwriter chill out.
  2. Lack of Best Practices: Larger nonprofits have developed strong best practices. They realize that systems must be in place to handle accounting, volunteer, HR, and other risk management issues. Underwriters fear that startup nonprofits are flying by the seat of their pants.
  3. No Budget: Will the new nonprofit be able to pay for insurance? Or will the insurance policy be the only asset available should the stuff hit the fan?

Those are the top three reasons.  Whether those assumptions are well-founded for any particular new nonprofit is another story. But those are common concerns overall

Small Nonprofits Can Impress Underwriters – If They Try

The best way for a small, new nonprofit to gain the respect of underwriters is to be meticulous during the application process.

Here are some specific suggestions:

  1. Resume: Include the resume for the executive director and any board memebers (whose resumes would impress). We normally get asked for resumes for startup leaders, so if you can present on the front end, it makes a favorable impression.
  2. Business Plan: Insurance companies will normally request budget information. Having some sort of business plan with funding plans is imperative. It shows foresight and planning and vision.
  3. Meticulous Applications: Most nonprofits will need to complete insurance company specific applications. Take care to provide concise, yet complete responses and not assume ‘it doesn’t matter’. Well done applications are always incredibly helpful.
  4. Policies and Procedures: Do a little research. Create an initial set of policies and procedures to capture volunteer management, client protocols, and other important items. A few Google searches should reap great benefits for you.
  5. Waivers: Insurance agents are notorious for saying that waivers are worthless. While a court might blast bazooka-sized holes through a waiver of liability, it still is a good idea. Anything you can do to help hold off a potential claim is smart.

Have You Had a Hard Time Finding Coverage for Your New Nonprofit?

I’d love to hear your story. Feel free to leave a note in the comments or reach out (all my contact information is on my about page or you can click here to request additional information).

Sometimes it’s a matter of an insurance agency’s or company’s appetite. Sometimes there’s something you can do to help your cause.

 

 

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