ARE YOUR NONPROFIT CLIENTS READY TO REOPEN THEIR OFFICES?
Practical guidance for evaluating insurance implications of possible alternatives
“The pandemic affected each nonprofit differently, an important factor to keep in mind.”
By Chris Hale
COVID changed the way nonprofits do business. Many organizations now are in the midst of reopening and reinventing the workplace, which can be a daunting and confusing undertaking. To be a true partner to your nonprofit clients, it is important to help them understand how to evaluate risks and insurance implications as part of their planning process. And now is a great time for agents to meet with clients to review their policies—even if it’s not time for renewal.
The pandemic affected each nonprofit differently, an important factor to keep in mind. To help guide your conversations, here is an overview of key areas to cover during review meetings, split into three categories: nonprofits ramping up operations, nonprofits resuming operations, and nonprofits scaling back operations.
For nonprofits ramping up operations
- Identify any new property and vehicles. If your clients purchased or leased a new building or vehicles—or if they plan to—it’s important to ensure they are scheduled on their insurance policy.
- Identify changes in operations that require special coverage. As nonprofits begin to hold fundraising events again, keep in mind that many policies include limitations, which could include number of participants or the kinds of activities covered, like concerts, fireworks, or ones with animals. The insured may be able to endorse their existing policy by scheduling that event, or they may need to purchase a separate policy.
- Ensure their policy covers operations off-premises. Your nonprofit client may be expanding its operations to provide more services off-premises. When meeting with them, make sure their policy doesn’t have a limitation endorsement to their specific premises.
- Review policies, procedures and best practices to ensure they meet their expanding and changing operational needs. If your nonprofit client is expanding its operations, they may need to implement new policies or procedures to address the changes. For example, maybe staff that had been using minivans to transport clients will now use 15-passenger vans instead because there is increased demand. You’ll need to make sure the drivers are trained and experienced—and add controls, like checking tire pressure.
For nonprofits resuming operations
- Review your client’s vehicle schedule to ensure it reflects their current fleet. Nonprofits may have sidelined some of their vehicles during the pandemic, so you’ll want to verify coverage has been reinstated before they hit the road.
- Inspect and verify that key life safety systems are in working order. Remind your clients to do things like install new batteries in smoke detectors and check fire extinguishers to make sure the pressure gauge is in an operable position. They should also check things like sprinkler systems and burglar alarms.
- Ensure your client’s business income limit includes accurate operating revenue. Provide your clients with a business income worksheet and walk them through the steps to determine the right figure. They may need to update things like payroll, grant funding or donations—or maybe their rent has gone up and their expenses have increased. You don’t want them to be over-insured because in the event of a claim, they’ll only collect the actual loss.
For nonprofits scaling back operations
- Understand the vacancy clause in your clients’ policies. Let’s say your client is a tenant in a building, and they’ve most of their contents out and therefore are not able to conduct their normal business operations at that premises. That could be an issue. Landlords need at least 31% of the total square footage of the building to be used to conduct business operations for it to be considered “occupied.” After 60 consecutive days of a building being “vacant,” your client will lose coverage for some perils, including vandalism, theft, sprinkler leakage, water damage, and glass breakage. If a loss occurs from a peril other than those, like fire, then the amount that the insured would normally be paid would be reduced by 15%. When meeting with clients, make sure their policies accurately reflect the status of the properties to ensure they are covered.
- Identify property or vehicles that need to be removed from their policy. Be sure to remove properties or vehicles nonprofit clients are no longer using or no longer own.
- Adjust their business income limit to reflect scaled back operations. As mentioned above, you’ll want to work with your clients to adjust their business income. If they have lower revenue, lower expenses or lower payroll, that will affect the limit.
- Report reduced staff and client counts. Be sure to ask your clients about this, as it impacts their premium.
Creating a valuable client experience is more important than ever in today’s rapidly changing insurance landscape. Taking a proactive approach and making time to guide nonprofits through a thorough review of their policies as they prepare to reopen can go a long way in relationship building and set you apart from other agents.
Chris Hale is the director at Care Providers Insurance Services (CPS), a program built by NSM Insurance Group, a leading provider of specialty insurance programs. For more than 25 years, CPS has focused exclusively on partnering with independent agents to serve nonprofit and social service organizations across the U.S. with specialized and comprehensive insurance programs. To learn more, visit info.ins-cps.com or contact Chris at CMHale@nsminc.com.<I>