Protecting Nonprofit, Religious & Childcare organizations is our passion. While these organizations help communities thrive & bring people together, they can still make mistakes as well that result in bodily harm, property damage, loss of income to others & the inevitable lawsuit afterwards.
Below are the most common types of Insurance claims that these organizations face & solutions to help protect these organizations.
Employment Related Claims - such as Discrimination, Harassment & Termination Claims. By Far the #1 Claim that Nonprofits, Religious & Childcare Organizations tender to their insurance carrier. The average cost for defending & settling employment related claims is approx. $160,000 - according to this article.
Solution: Your company can implement some strategies to prevent EPLI Claims & help lower the overall exposure to the company in the event of a claim (let's face it.... some ex-employees will decide to sue regardless of facts).
- Purchase an Employment Practices Liability Policy (while this could be the last step, I'll explain my reasoning for this below). While these come in all shapes & sizes with different coverages & deductibles (retentions), my recommendation is to find a carrier that will partner with your specific organization to help implement preventative strategies noted below. Many carriers offer these services for free if you are a client of theirs, including:
- Create a Discrimination & Harassment Policy - work with a lawyer & your EPLI carrier to help implement a policy that is applicable to the laws in your state.
- Develop Training for Managers all the way down to the Interns based on the terms of the Discrimination & Harassment Policy. This should include what types of behavior are not permitted, how to identify & report them.
- Immediately & Thoroughly Investigate Complaints - being quick to investigate an employee complaint is the most important step. Please keep in mind that other employees at the organization should be prepared to cooperate in an investigation if needed.
Volunteer Injuries - For many Nonprofit & Religious leaders, volunteers are the backbone of their organization. When a volunteer gets injured while working for the organization, they are going to need financial assistance to assist with their medical bills & potential time that they have to miss at their "paying job". This could mean a large sum of money for nonprofits working on a shoestring budget.
Solution: While Workers Comp Insurance seems like the obvious solution here, most workers comp carriers will not pay for bodily injury sustained by volunteers (very few have an option to add on this coverage for additional money). This is where an Accident Policy can come into play. With common coverage limits of $25,000 for Accidental Death & $50,000 (up to $100,000 with some companies) for Expense Benefits (for hospital bills, ambulance expenses, dental care, etc.) this provides excellent protection for any organization that utilizes volunteers.
Abuse & Molestation (SAM Claims) - While far less common than the 2 types of claims above, Abuse & Molestation Claims are one of the costliest claims that a Nonprofit, Religious or Childcare organization can sustain. Not only in terms of monetary settlements but also in terms of reputational damage. With the average settlement amount above $200,000 & years of public relations work this type of claim can bury many companies.
Solution: Your company can implement some strategies to prevent SAM claims & help lower the liability to your organization in the event of a claim (even if the claim has no merit, the legal fees & reputational damage can be tremendous).
- Purchase an Abuse & Molestation Policy. These are often included in either the General Liability Policy as an Add-On type of coverage or can be purchased along-side the Professional Liability policy (depending on the carrier). There are also standalone SAM coverages available, although standalone options are often far more expensive. Many Insurance Carriers that provide this coverage will also provide some FREE Risk Management services to assist the organization with preventing claims including:
- Create an Abuse & Misconduct Prevention Policy. These policies should include a prohibitive position statement, clear instructions on how to report suspected abuse, and detailed guidance on "grooming," a process used by perpetrators to gain trust from both the child and other adults.
- Document Employee & Volunteer Training, including providing Hiring Manager Training. Many Insurance companies provide this service, or this is a great place to start.
- Perform Criminal Background Checks on all Volunteers & Employees. Many Insurance Companies provide this service, or this is a great place to start.
While these are just a few of the potential liabilities facing nonprofit, religious & childcare organizations, these tend to the most crippling types of claims. Please give us a call to discuss your current Risk Management program & see how we can assist your socially good organization today.