Does Your Non-Profit Insurance Cover These 10 Key Risks?

April 26, 2024

Does Your Non-Profit Insurance Cover These 10 Key Risks?

Insurance/By Julien/0 comments

Your non-profit is dedicated to serving its mission. You go above and beyond to protect and advance it. But for all the focus put on helping others, you may not have a true focus on what you need to do to protect yourself.

“Unfortunately, many non-profits don’t realize until it’s too late that they have the same liability issues their for-profit counterparts have,” says Paul Siragusa, Senior Vice President of Commercial Lines Underwriting at Philadelphia Insurance. “Anything that a for-profit company can be sued for, a non-profit can as well. And, they may have additional risks to be concerned about, especially if they are in the human or social services sectors.”

Considering that non-profits are the third-largest employment industry in the country, employ over 11 million people, and also use over 60 million volunteers, claims opportunities grow exponentially. That’s why we help non-profits understand the types of coverage holes hidden from their view first, before they can prevent risk exposure. But what types of exposures could they find?

Here’s a list of ten real exposures and damages incurred by non-profits that illustrate just how widespread the risks are.

Could Any Of These Ten Exposures Happen To Your Non-Profit?

Professional liability, abuse/molestation, fundraising, discrimination, fiduciary liability, and more – these expensive real-life non-profit claims may be more common than you think.

1. Equipment Breakdown:

• Lightning struck a transformer pole, sending a surge into a building, which caused damage to some a/c units and computers.
• Loss: $219,000

Takeaway: Unexpected damage to a non-profit’s building and equipment can occur at any time.

2. Environmental Damage from Groundskeeping:

• A condominium association applied fertilizer to the common areas around the complex. Unfortunately, the fertilizer washed into a neighbor’s pond. The association had to restore the pond.
• Loss: $55,000

Takeaway: Similar unfortunate, unplanned consequences could happen to anyone maintaining their own properties. However, non-profits that provide landscaping services to others through an integrated employment program could face significant additional liabilities.

3. Accident at a Special Event:

• During a special event sponsored by the insured, a participant exited a golf cart and fell backwards into the cart. The cart rolled down the road hitting a tree.
• Loss: $1.75M

Takeaway: Fundraising activities open up other far-reaching concerns about liability and safety measures for guests and staff.

4. Class Action Suit for Misrepresentation:

• Students filed a class action suit alleging their school’s promotional material misrepresented one of its locations’ accreditation. Damages included expenses for students to take additional classes for credit and loss of income.
• Loss: $100,000

Takeaway: Claims a non-profit makes about itself or its services could negatively impact others who depend on them if they’re embellished or not true.

5. Termination and Retaliation:

• The chief financial officer terminated his executive assistant for sharing confidential information to other staff about upcoming layoffs. In response, the assistant sued the CFO for retaliation and sexual harassment, claiming the CFO made frequent suggestive comments and improperly touched her.
• Loss: $150,000

Takeaway: There are always going to be disgruntled employees who retaliate when action is taken against them.

6. Disability Discrimination after Medical Leave:

• An employee went on medical leave when ill. When it was time to return to work, he learned his position had been filled by someone else, and his job was no longer available. He filed suit for lost wages, emotional distress, and violation of disability discrimination statutes.
• Loss: $100,000

Takeaway: Someone will always challenge employment practices, whether the claim is valid or not.

7. Employee Improperly Using Funds:

• An Executive Administrator was using a company credit card for personal purchases.
• Loss: $530,000

Takeaway: A series of small losses can have a significant impact on an organization’s financial health.

8. Privacy Breach Trash:

• An employee of a rehabilitation center improperly disposed of 4,000 client records, violating its privacy policy. The records contained social security numbers, credit and debit card account numbers, names, addresses, telephone numbers, and sensitive medical information.
• Loss: Fines and penalties paid to the state along with $890,000 in customer redress funds for credit monitoring for the victims.

Takeaway: Threats against privacy and information leaks are always in the news. But it’s not always hackers and cyber security that non-profits need to worry about – it could be employee mishandling.

9. Workplace Violence:

• At a local senior center, a physical therapy counselor was attacked by an angry family member who blamed the counselor for sores and scars on his father’s body. He claimed they appeared after a recent therapy session. The counselor suffered two broken ribs and multiple head injuries from the attack.
• Loss: $55,000

Takeaway: Unfortunately, although unpredictable, workplace violence has become a common threat.

10. Misappropriation of Funds:

• It was alleged that a grant-making foundation receiving private donations was using those funds for purposes not associated with its mission. A group of supporters sued the foundation’s board for misappropriation of funds and breach of duty.
• Loss: Over $1M

Takeaway: Because of their unique missions, non-profits may come under scrutiny and suffer financial repercussions more often than they could imagine.

These ten real-life examples prove three things:

One: That claims can happen anytime, anywhere, and for any reason.
Two: In many instances, the hit to the non-profit’s reputation can do incalculable damage if not handled correctly.
Three: For those organizations that suffered a large loss, the organization’s costs far outweighed the insurance premiums – making it well worth the value for the protection provided.

 

To review your risks, exposures and coverages, please contact us today at: