By guest author: Michael Santocki for Crystal & Company. This guest article originally appeared on Crystal & Company Viewpoints
As recent events—from the Harvey Weinstein scandal to near-daily mega-cyber breaches—illustrate, risk concerns continue to shift. Traditional insurance models emphasizing property loss and general torts have given way to high-exposure employee litigation and issues surrounding cyber liability. A decade ago this article might have discussed nonprofits’ need for specialty insurance products to cover those rising exposures. Fortunately, most now have these policies in place. Forward-thinking leaders are now looking for ways to maximize the risk transfer process for their organization.
While Employee Practices Liability, Crime and Cyber Liability policies do protect against a range of concerns—everything from harassment and discrimination, pay equity litigation and fraudulent expense reimbursement to phishing and network security—signing on the dotted policy line is just one part of effective risk transfer.
Nonprofit leaders who want to maximize their coverage—especially those making do without adequate personnel for proper control and oversight—would do well to adopt the following protocols.
1. Read the fine print. Most people never really study their policies. And, no, it’s not the most exciting reading. Even a quick review will get you clear on what’s covered, and what’s not.
2.Piggyback on your broker’s expertise. Few nonprofits can staff internal risk management experts, but if you’ve chosen a broker with an extensive nonprofit client base—and if you haven’t, you should—they’ll have plenty of advice to offer on risk, strategy and tactics.
3. Use your perks. As mentioned, these free services—a few examples follow— are meant to help you mitigate risk before it becomes a claim.
- Access to attorney hotlines for quick advice on day-to-day issues
- Free consultation with a breach coach
- Sample employee handbooks and policies
- Liability updates, checklists and specialty training
- Hiring and firing guides
- Data breach notification and credit monitoring
Surprisingly few policyholders take proper advantage of these potentially invaluable resources. Attorney hotlines, for example, can provide answers and next steps when you think you have a problem; it’s certainly worth a quick call before, say, firing a challenging employee. Similarly, signing up for an email alert about changes to the law can keep your organization from putting an illegal box on an application that results in a subsequent class-action suit.
4. Don’t settle for a shelf policy. Many insurance companies have “B policies” and “A policies.” The difference is in the details—usually five to seven “endorsements” that improve the coverage. For example, standard policies don’t allow for a claim to be initiated until there is a subpoena; better versions begin the process upon request for information. This is an important difference, given that you will have to pay for lawyers from the beginning.
5. Think before you renew. This will require a little homework, but your future self—and organization—will thank you. First, make sure your broker has the necessary capabilities in your sector. Second, make sure he or she isn’t just selling a shelf policy. Third, engage the competition. Most brokers are willing to critique your existing policies for free, which will give you more data about what’s working and what’s not.
As a responsible nonprofit leader, you’ve doubtless put thought into your organization’s insurance policy. But to ensure a healthy future, you need to maximize your protection. By reviewing your existing policies, leveraging your broker and taking advantage of valuable free benefits, you should be able to get the most out of your coverage without paying more.
For more information, please contact Robert Trobe at Robert.Trobe@crystalco.com or 212-504-5960.