Non-Profits at Risk: Unprepared and Underinsured

A recent study suggests that the non-profit sector is generally underinsured and unprepared for liability risks. In its Nonprofit Risk Survey, available here an international risk advisor concluded that nonprofits are not allocating enough dollars to properly protect against risk. Far too many non-profits have not completed an independent risk assessment meaning that they are unaware of their vulnerabilities. Since many non-profits surveyed are purchasing the bare minimum coverage, this is a recipe for disaster.

Reportedly, non-profits are particularly susceptible to media liability, network security, cyber liability and … professional malpractice. That’s right; many non-profits provide counseling, consulting or even legal or medical consultation. These risk exposures likely constitute professional services that may fall outside of a general liability policy. In addition to a GL and PL policy, non-profits should also consider D&O, crimes coverage and automobile liability, to name a few.

The risks of professional malpractice are lurking. To combat this possibility, insureds must detail the extent of their operations to their broker/insurer with an eye toward obtaining sufficient coverage – by amount and type – to combat risks. According to this study, the non-public sector has considerable room for improvement in this regard.