What Are Your Nonprofit Organization Risks?

by GDI Insurance | GDI Insurance, Non Profit Organizations, Risk Management

What Are Your Nonprofit Organization Risks?

Nonprofit organizations provide essential social services that benefit the community and their members. However, even if your organization doesn’t sell a product or generate profit, there are still a number of potential nonprofit organization risks that can affect your employees, assets, volunteers, directors and officers, and most importantly, your mission.

Countless claims can be brought against your nonprofit. For example, a volunteer could sue your directors and officers for discrimination or harassment, leading to costly litigation. Additionally, should an individual injure themselves at one of your events or on your property, they could bring a claim against you. The list below provides an overview of these nonprofit organization risks and more—helping you identify potential blind spots in your risk management and nonprofit insurance programs.

Just a Few of Nonprofit Organization Risks

Directors and Officers (D&O): With each decision they make on behalf of your organization, directors and officers (D&O) of nonprofits assume a level of risk. In the event of a claim, nonprofit leaders can suffer damage to their reputation and personal finances. What’s more, D&O claims can come from a variety of sources, including employees, clients, volunteers, regulators, and donors. Find out about our Nonprofit D&O Insurance options.

Volunteers: Nonprofits depend heavily on the kindness of volunteers to successfully carry out their mission. However, should one of these individuals injure themselves while serving your organization, you could be held liable for any damages. What’s more, insurance coverage for volunteers isn’t always available under general liability policies. Accordingly, many nonprofits choose to insure their volunteers under a stand-alone insurance policy.

Sexual Assault: Nonprofits are at risk for false allegations of sexual assault due to the unique characteristics of these organizations (e.g., frequent, unsupervised interactions between children and trusted adults). Whether legitimate or not, sexual abuse allegations involving employees, volunteers, or directors and officers can have catastrophic consequences for your group or organization.

Property: Property that includes your building, fixtures, office equipment, data, signage and similar items—play a key role for your organization. And, in the event of a loss caused by fires, theft, vehicles or vandalism, your nonprofit can suffer major financial damages. What’s more, a single incident can affect multiple aspects of your property, compounding costs and downtime for your organization.

Professional Liability: If your nonprofit provides counseling, training, or other kinds of instruction or services, professional liability exposures can be substantial. When providing these services, any errors and omissions—whether intentional or not—can create serious legal concerns. Specifically, should your organization, board of directors, employees or volunteers provide advice or make decisions that harm a third party, your nonprofit could face legal action.

Cyber Crime: As more and more nonprofits use databases to keep records of members, clients, volunteers and donations, cyber exposures will continue to increase. In fact, nonprofits are a common target for cyber criminals, as these organizations often process a high volume checks and credit and debit card information when taking donations. In addition, volunteers and employees who are improperly trained on computer and data safety could increase your nonprofit organization risks of ransomware, viruses, phishing scams and malware.

Automobile Exposures: Depending on the services your nonprofit offers, employees and volunteers may be required to operate a vehicle on your behalf, creating automobile exposures in the process. While important for transporting volunteers, hosting successful events and carrying out other organizational tasks, the improper use of a vehicle can lead to potential accidents and major insurance claims. What’s more, if you allow employees and volunteers to use their own vehicles for work, standard auto policies are often not enough.

Workers Compensation: Any time one of your employees or volunteers is injured on the job, your organization could be subjected to expensive workers’ compensation claims. Common sources of on-the-job accidents for nonprofits include slips, trips, falls and musculoskeletal injuries caused by repetitive tasks, sprains and strains. Normal, everyday tasks related to data entry or setting up an event can lead to accidents and, in turn, increased costs for your business.

Does your insurance agent keep you in the loop with the many nonprofit laws and regulations?

GDI Insurance Agency, Inc. can assist you in understanding the various laws that apply to nonprofit organizations, so you avoid penalties.

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As one of the fastest growing agencies in California, GDI Insurance Agency, Inc. is able to provide its clients with the latest and greatest of what the insurance industry has to offer and much, much more.

With locations across the heart of California’s Central Valley and beyond to provide a local feel to the solutions and services we provide our clients. We pride ourselves on exceeding our client’s expectations in every interaction to make sure that our client’s know how much we value and appreciate their business. Contact us today 1-209-634-2929 for your comprehensive nonprofit insurance quote!

Nonprofits – The Added Exposure to High Workers Compensation Cost

by Grant Davis | Insurance, Non Profit Organizations, Workers Compensation

Nonprofit Agencies and Workers Compensation

With the recent changes to the California Insurance Marketplace, specifically the recent adjustments by the Workers Compensation Insurance Rating Bureau (“WCIRB”) to the way in which Experience Modification Factors (“X-Mod”) are calculated; many organizations were not prepared for the full impact of the changes. It can be especially burdensome for Nonprofit Agencies and Service Organizations that may have a higher susceptibility to loss than other organizations.

Further, Service and/or Mission Oriented Nonprofit Agencies and Nonprofit Organizations have a unique exposure when it comes to injuries to workers (and volunteers) – they typically care too much.

Experience Modification Factor Calculation Change

The WCIRB recently adjusted its way of calculating an organization’s X-Mod by doing away with the fixed value for the Primary Threshold for Losses and replacing it with a formula that creates a sliding scale, Effective January 1, 2017. This sliding scale is intended to give a larger Primary Threshold to larger employers (i.e. Organizations with larger payrolls).

The impact we’ve seen has been a compounding of the impact/magnitude of losses on an organization’s X-Mod, which in turn equates to a similar impact to their Workers Compensation premium.

We recently witnessed one of our Nonprofit agencies clients have an increase in their X-Mod of nearly 15% due almost entirely to the change in the calculation. We’ve been working diligently with this Nonprofit as they have approx. 50 employees and volunteers and this 15% increase in their X-Mod will result in an increase in Workers Compensation premium of no less than $18,000 for just this year alone.

Employees at Nonprofit Agencies

If we take a quick moment and think of a Nonprofit, Service Organization, etc. that we are fond of; what is one of the key components of what makes that Nonprofit, Service Organization, etc. successful? It’s the PEOPLE. The people care, and many times they can care too much. Unfortunately, many times it’s the same people who care so much for the organization that can expose it to unnecessary financial hardship due to an injury.

Example: A Nonprofit is serves meals to members of the community in need. One caring employee sees that there is a pallet of food that needs to be put away. This employee takes it upon themselves to roll up his/her sleeves and “help out”. The pallet contains 40-pound boxes of frozen meat and it needs to be put in the walk-in freezer. The employee feeling the cold of the freezer decides to hurry, twists while lifting one of the last boxes and suffers a lower back injury.

In the example, the employee’s motives were altruistic, however depending on the severity of his/her injury the Nonprofit could be facing steep insurance premium implications. Sadly, this situation happens all too often amongst both employees and volunteers in Nonprofits and Service Organizations.

Volunteers

Many Nonprofit organizations depend, either in whole or in part, on the work and contribution of volunteers. Volunteers are a seemingly “No-Brainer” for Nonprofits to utilize as much as possible, and while this is true there are some potential costs that Directors, Board Members, etc. should be cognizant of.

Although Volunteers do not create a payroll expense, they do create a risk to insurance
Injuries sustained by Volunteers are treated the same as those to Employees
The Cost implications of Volunteer injuries are the same as those of Employees
X-Mod implications are compounded and/or Multiplied by Volunteer injuries
a.The X-Mod is calculated using both Payroll (reduces the factor) and Claim Cost (increases the factor) – Volunteers only contribute to the Claim Cost

To better insulate the Workers Compensation Cost Structure of any Nonprofit, Service Organization, or any other organization for that matter; training and accountability become critical. Although volunteer labor is commonly discounted as “not costing anything”, volunteers should be treated and trained the same or as similar as possible to regular employees.

The best Defense is ALWAYS a good offense, and the same is true in defending against claims. Training, guidance, and open dialogue as to why it is needed can provide incalculable benefits to the organization’s Workers Compensation Cost Structure.

If you would like further details on Workers Compensation Cost Structure Strategies, X-Mod Factors, or anything else, please contact GDI Insurance Agency, Inc.

Matthew Davis

President