Have a non-profit organization – Consider an umbrella policy

Not long ago I checked the liability insurance of a non-profit start-up, a local arts, music and literature club. We researched the actual costs of running the group to prepare a business plan and attached proformas. Insurance is a real expense, something the group really needs, and really every group or company should have in this litigious society of ours in the current period. Okay, let’s talk about what it takes.

It turns out that here in California we can buy insurance through an insurance broker for about $1250 a year. The company would allow the group to make 1, 2, 4 or 6 payments, spreading the cost over the year. This would allow the organization to have blank “Additionally Insured” certificates for the various venues, shows and art instruction events. What else do we get for this? A $1 million and $300,000 per event liability policy, perhaps more than we actually need, but certainly what some real estate owners, managers, and government agencies need for their own risk management strategies.

Well, having a decent general liability policy is great, but if you read these general liability policies closely, it’s really amazing how many clauses they contain that prohibit payouts on relatively common liability risks or potential claims. Therefore, it may be wise to have an umbrella policy that starts where your policy leaves off and then expands for a few more million dollars. This can save you tens of thousands of dollars in legal fees when fighting a bogus insurance claim.

You see, you just never know what could happen and everyone in your group needs to be protected along with the group organizers themselves. Finally, I would like to mention the fact that the board of directors of every non-profit organization should be concerned about this, it’s something they should know and think about. It would be a dereliction of duty if board members did not raise the insurance issue and properly insure their organizations. Not only to protect the board members and the group itself, but all members and citizens who come to their events, a general liability policy with an umbrella rider may be the way to go.

If you’re starting a non-profit, think about this and ask your insurance agent exactly how to best insure your group for the most likely potential losses, then ask for an umbrella policy to cover the whole thing again. Please consider all this and think about it.