Why We’re Different: Three Ways Commercial Competitors Can’t Beat Us

March 20, 2019 by Rand Chritton

Nonprofit organizations seeking insurance will find an assortment of insurers that promise to meet obligations to nonprofits and offer innovative products, but Nonprofits Insurance Alliance (NIA) was the first to introduce coverages tailored specifically to the unique needs and conscientious budgets of 501(c)(3) nonprofits. Our service to nonprofits extends beyond the stable pricing of our policies: many of the coverages we offer are unprecedented. Here are three features we offer that commercial competitors don’t.

  1. Property you don’t own but have in your care, custody, or control? We cover it.

NIA issues an endorsement with respect to Property Damage to Personal Property in the Care, Custody, or Control of the insured. It’s incorporated into our Commercial General Liability Coverage (CGL) form as a template endorsement, meaning it’s included on every policy without charge.

Our coverage also amends the Bodily Injury and Property Damage Liability coverage to include a $25,000 defense and a $25,000 indemnification obligation to protect the insured. Our insured members have used this unique coverage in a number of different claims over the years, for everything from lost backpacks, to horse-related personal property, to borrowed stage props, to pets left in an animal shelter.

Commercial companies, on the other hand, use a CGL form that excludes property in the care, custody, or control of the insured. So if your nonprofit borrows equipment from others or your client leaves personal property with you that becomes damaged or stolen as a result of negligence, our competitors’ coverage wouldn’t defend or indemnify your nonprofit from the claim and/or lawsuit brought by the property’s owner. Our coverage would.

  1. We reimburse your organization for employees on leave during assault and abuse investigations.

Our Improper Sexual Conduct and Physical Abuse Liability coverage includes a $10,000 reimbursement to the Named Insured for an employee suspended with pay during investigation or defense of an improper sexual conduct and/or physical abuse allegation.

Good practices require that the insured place the individual against whom the allegation has been made on administrative leave in order to remove the alleged harm. This is a hardship, particularly for smaller nonprofits who cannot afford to continue paying the accused employee while also paying any replacement employee.

The difficult choice for the insured is whether to comply with good practices and place the employee on administrative leave or otherwise to ignore the allegations against the employee (and risk ratification of that employee’s alleged actions) because of the expenses.

Providing the $10,000 reimbursement to the Named Insured eliminates this difficulty. The employee can be placed on paid administrative leave and a replacement can be hired whose pay is covered by the reimbursement.

None of our competitors—even when they advertise services to niche markets—provide this type of benefit, which is tailored especially for the nonprofit community. This reimbursement benefit has been provided on probably half of the improper sexual conduct and physical abuse claims presented against both the insured and the alleged bad actor. The coverage enables nonprofits to do right in placing the accused employee on administrative leave—without causing a financial strain on the nonprofit or compromising the safety of the services it provides its community.

  1. Breach-of-contract claims include $250,000 Defense Costs coverage in Directors & Officers (D&O) Liability coverage.

Our Directors & Officers (D&O) Liability coverage includes a $250,000 Defense Costs coverage with respect to breach-of-contract claims.

Both NIA and our competitors’ D&O Liability coverage include an exclusion with respect to an actual or alleged breach of a contractual obligation of the insured. For an insured, there are two parts to any claim involving a breach of contract: (1) the indemnification obligation if it’s found that the Insured owes for that breach; and (2) defending the claim or suit.

However, under our competitors’ policies, the insured has to incur the cost of the defense without the benefit of insurance, even when the insured has a valid defense to the breach of contract claim. If the insured fails to pay rent under a lease agreement, fails to make payment with respect to a leased copier, or fails to comply with the requirements of a grant and is sued under the False Claims Act, the cost of the defense of such claim/suits can be significant.

The NIA D&O Liability coverage includes, as a template coverage, a $250,000 Defense Costs sublimit. We’ll retain counsel to defend the claim or suit, and while we have no obligation to pay for the contractual obligation, defense counsel is able to raise affirmative defenses and otherwise protect the interests of the insured.

Over the years, this coverage has been used for a wide range of claims, including breach of the lease of the rented property and a leased copier. The most significant use of this coverage has been with respect to the False Claims Act actions, brought by either the a state or the Federal Government, claiming that the nonprofit has improperly used grant money that the government entity extended to it. The Defense Costs exception to the Breach of Contract exclusion allows us to defend these claims and provides resources for the nonprofit to explain the basis on which the actions were taken, with the benefit of counsel we provide.

We’ve always paved the way for the insurance industry. If you’re a 501(c)(3) nonprofit in need of insurance, you can view more of our benefits here.

We only offer coverages through insurance brokers and agents. If you need insurance, don’t hesitate to contact us for a quote. We’ll speak to your broker or refer you to one.

Rand Chritton

About the Author

Rand Chritton is Claims Counsel for the Nonprofits Insurance Alliance. Rand is an AV rated lawyer, licensed in California, enjoying over 25 years of experience of working with nonprofits and insurance coverage. He is a co-author of the California Insurance Law Handbook. Rand takes pride in being an attorney who solves insurance problems and overcoming legal challenges for the nonprofit community.

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