Property Insurance for Nonprofits

Property insurance is as vital to the survival and risk management of a nonprofit social service organization as are liability coverages.

The recent windstorms in the plains and Midwest and the upcoming hurricane season are reminders of the devastation that weather and other natural events can wreak on the things we own and depend on for shelter, work, and well-being.

Truth be told, despite the fact that my work is mostly dedicated to high liability nonprofits that are in the human service arena (foster placement, group homes, services for individuals with developmental disabilities), the main claims that have caused my clients stress have been property related.

Tree Nearly Destroyed My Church's Playground

Tree Nearly Destroyed My Church’s Playground

Even my main liability claim was an accidental fire that burned down an apartment building my client was leasing. Although it was a liability claim, it was a property damage situation.

A Survey of Property Coverages (and Coverages Generally in the Property Category)

I will include some coverages in here traditionally in the ‘inland marine’ and ‘crime/bond’ coverage category. But since you’re not in insurance (at least I hope some of you who read this are nonprofit managers or board members), I’m not concerned about being all that technical. My concern is that you know the coverages available for the various types of ‘stuff’ you have.

Property: Building Coverage – This, obviously, addresses any building or structure you might own.

Property: Business Personal Property or Contents Coverage – This coverage provides protection to replace general office and business equipment, furnishings, stock, etc.

Property: Business Income and Extra Expense – This coverage helps to make up for your loss of income. The ‘stuff’ it covers is your income and any extra expenses you might incur to set up operations elsewhere and take care of any ancillary expenses such as advertising or marketing related to being displaced.

Equipment Breakdown – This can address a wide variety of equipment, from boilers and HVAC systems to a variety of other mechanical systems that serve the property you own or lease. Some claims that involve power surge, boiler explosions, and other mechanical breakdowns aren’t addressed on your basic property policy. You’ll need to make sure that this type of loss is covered.

Electronic Data Processing Equipment – How would you like to have one of those lightening strikes destroy your phone, computers, and other data-driven machines? That could cause some major expense. Many policies include some coverage for this type of loss, but it’s a good idea to make sure with your agent or with a good thorough read of your policy.

Cash, Funds, Securities, etc – Again, these are items that aren’t covered under your typical property coverage. Some policies have features to address this possibility of loss at a small limit. But if you are a recipient of government grants, contracts, or donor funds, you’ll want to make sure that you have a policy in place in case Joe Joe in accounting gets sticky fingers and runs off with some of your funds.  It was a huge issue here in the Atlanta area where an employee embezzled over $1,100,000 in funds from the Woodruff Arts Center.  A couple of the largest claims we’ve seen, both with for profit and nonprofit entities, have been ‘trusted’ employees thieving from the corporation.

Electronic Data, Accounts Payable, Valuable Papers, Signs, and so on and so forth – Trickiest of all are those semi-intangible items. We’ve seen VHS recordings get flooded and loss data and various other things happen where experts need to be called in to recreate accounts payables, valuable papers, client and other data. All of those have costs associated with them and many of them aren’t covered directly on a standard property policy.

What About Your Nonprofit?

I typically advise clients to review all the ‘things’ their organization depends on, both things you can touch and feel and virtual items like important data and information.

If you lost these things or didn’t otherwise have backups available, what would the costs in time and money and loss of ability to serve your consumers and clients?

Make a list of all of these assets and discuss with your agent how to cover the things vital to your ongoing operations. You’ll have to make a call based on your budget, but it’s good to know that if you can’t cover everything by purchasing insurance, you can at least put an alternative risk management plan in place.

Questions

  • Have you experienced a debilitating property claim?
  • What non-insurance risk management do you have in place for your property, data, etc?

 

 

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