Management Liability Policies Help Nonprofits Avoid Detrimental Financial Troubles
According to the State of the Nonprofit Sector study performed by the Nonprofit Finance Fund, the top challenge nonprofit organizations face is achieving long-term financial sustainability. Nonprofits need funding to accomplish their mission and keep their doors open. The need for budget cuts or potential reductions in funding could impact the financials of organizations significantly.
Making the decision to purchase an insurance policy may not be at the top of the list when it comes to allocating funds. However, nonprofits are at risk of a number of exposures including misappropriation of funds, discrimination and breach of fiduciary duty. Benefits of an insurance policy can easily outweigh the cost, especially should a claim arise. Consider the following claim example:
A nonprofit organization provides various services to the underprivileged and has recently been gaining positive publicity for its contributions to the community. Widespread news of their mission attracts a group of donors who collectively contribute a large sum of money to help support their cause. The organization decides to use an outside investment firm to invest and manage a large portion of the money. The investment portfolio does not perform as expected and results in a loss. The donors bring a lawsuit against the organization for mismanagement of funds and breach of duty, incurring defense costs exceeding $90,000.
A lawsuit can have a lasting impact on the financials of a nonprofit organization, even if the lawsuit is frivolous. Not only are nonprofits exposed to mismanagement of funds and breach of duty claims, but also discrimination and harassment. A management liability policy is one of the best ways to protect a nonprofit organization from these types of claims.
Devon Park Specialty’s Executive ViewPoint (EVP) product is designed to protect nonprofits from these exposures. EVP offers directors and officers, employment practices and fiduciary liability coverages.
EVP offers cost savings advantages to assist nonprofit organizations as well. A Timely Notice and Resolution Incentive is included within the EVP coverage form. Under this provision, the insured’s retention can be reduced, up to $10,000, if settlement of the claim is finalized within 60 days of the claim being reported – subject to certain requirements.
An EVP policy also includes the following expense limits, available via endorsement:
- Privacy breach expense
- Workplace violence
- Identity theft
- Kidnap and ransom expense
Devon Park Specialty’s Business Resource Center provides value-added resources that can benefit nonprofit organizations. These services include discounted background checks, data breach prevention information (including complimentary access to eRisk Hub), discounted payroll services and much more.
These cost-saving features allow nonprofit organizations to allocate more funds toward accomplishing their mission.
Key coverage advantages of EVP include:
- Limits up to $5,000,000 available for each coverage part
- Additional Side A limit of $1,000,000 automatically included
- No hammer clause
- Non-rescindable policy
- $100,000 sublimit (defense and indemnity) for Wage and Hour claims, available in most states via endorsement
- Lifetime Occurrence Reporting Provision (LORP) for former directors and officers
Please contact your Devon Park Specialty underwriter today for more information on our EVP product.
As always, thank you for your support and business.
Contact Kenny Bang
Product Leader | 844-438-6775 Ext. 2923
Written by Samantha Hildebrand
June 7, 2018