Tuesday, May 1,
2018 09.59AM / Clements Worldwide
A common misconception about
nonprofits is that they’re simply too small to be at risk for liabilities and
their employees will be protected because of their status as humanitarians. All
organizations – even well-meaning nonprofits – need protection. Organizations
of any size are at risk for a variety of legal problems.
With years of experience helping
nonprofit organizations stay protected from unforeseen risks, Clements
nonprofit specialist, Michelle Brown, knows how closely related a nonprofit’s
ability to function and its risk management strategies are. “The purpose of
risk management, including business insurance, is to protect the nonprofit’s
assets,” Brown says. “If you don’t protect the assets, you risk not
accomplishing your mission.”
Here is a sampling
of the kinds of claims filed by nonprofit organizations:
- A student borrowed a car during
a trip abroad with a university, lost control of the vehicle due to road
conditions, and wrecked the vehicle.
- A nonprofit employee was bit by
a flea during a work-related travel in the Middle East, resulting in
emergency air transportation to Germany and two weeks of hospital care.
- An anonymous individual
contacted a nonprofit and claimed the organization’s computers had
been hacked, demanding $1 million to keep sensitive data private.
- A representative of a US-based
nonprofit began receiving death threats stating that if he did not leave
the country, then he would be killed.
- A major shipment of
humanitarian supplies was stolen from the port after arriving in the
In each of these scenarios, the risk
posed to the nonprofit came through forces that were either unpredictable or
outside of the control of the individuals managing the organization.
As well-meaning as a
nonprofit's mission and work may be, there are too many scenarios where
the actions of volunteers, employees, or others could create liability for the
organization or put the livelihood of the employees, volunteers, or
contractors at risk.
How to Mitigate Potential Risk to Your Nonprofit
With so many potentially risk-inducing
situations facing a nonprofit, a strategy to manage that risk is essential.
Developing a risk management strategy also improves the insurability of your
organization. Obtaining the right kinds of insurance coverage should be at the
center of this policy. Without the proper coverage, the very mission of a
nonprofit could be at risk.
Without proper insurance coverage,
Brown says, “a single claim could take out the budget of organization for the
“With proper insurance,” Brown
continues, “you’re actually protecting the ability of the nonprofit to
What Types of Insurance Should International
While the specific needs of each
nonprofit will vary depending on the operating regions, type of work performed,
and other factors, nonprofits generally look to manage risk with the following
types of insurance:
- General Liability
insurance: Helps protect the organization
when someone is hurt or property is damaged in the office, clinic,
fundraising event, or other area.
- Auto insurance or
Fleet insurance: For employees or
volunteers who bring their own cars or who hire cars (as is very common
abroad); or for support of vehicles. that are critical to accomplish
mission objectives such as delivering food or services.
- Property insurance: For property (such as computers, equipment, or records) leased or
owned by the nonprofit.
- Personal Accident
insurance: Covers an injury sustained by a
volunteer, program participant, gallery patron, or other individual on the
- Fidelity insurance
(or more commonly referred to as Crime insurance): Protects the organization from criminal acts, including acts
performed by employees or volunteers, including wire transfer fraud,
embezzlement, and check fraud.
- Improper Sexual
Conduct insurance: Especially important
if an organization works with vulnerable clients such as children.
- Errors &
Omissions insurance: Protects your
organization from claims from your client, i.e. the people you are
servicing, for errors in your work or your ability to provide the services
- Directors &
Officers Liability insurance: Indemnifies,
i.e. reimburses the organization or its directors and officers for losses
or advancement of defense costs in the event an insured suffers a loss as
a result of legal action brought for alleged wrongful acts in their
capacity as directors and officers.
- War and Terrorism
extension: If you are working in high risk
areas, you may need to add an extension to some of the policies described
above which typically have exclusions for acts of political unrest,
increasingly likely, or terrorism, less likely but potentially
Too Important to Ignore
With so many factors outside the
control of the nonprofit, it is important to get protection – especially for
small organizations without large operating budgets. “Even if you only have 5
staff overseas or just two vehicles,” says Brown, “it only takes one thing to
go wrong and the dream you had to help people could be over.”
Fortunately, by obtaining risk
coverage, nonprofits don’t need to fear liabilities while pursuing their
missions. If coverage is needed, Clements Worldwide can assess an
organization’s needs and find a risk coverage plan that’s the right fit.
Case Study: NGO Member Life Saved by Clements
Kidnapping and Ransom Policy
While rarely publicized, the
kidnapping of NGO employees based or traveling overseas is on the rise. In
2009, a member of an NGO in the Philippines was kidnapped by a local gang at
gunpoint and held hostage. Through the Kidnap and Ransom extension from Clements,
crisis consultants were quickly sent in with travel expenses covered. The
consultants were able to negotiate a lower ransom amount and secure safe
release for the victim. Thanks to the NGO’s Kidnap and Ransom insurance policy,
the organisation was able to safely return its employee while all related
expenses were covered. Case Study: DBA Provides Lifetime Benefits to US
National Employee’s Family
A bomb exploded in an international
development group’s Baghdad outpost, killing a US-national employee. As the
sole breadwinner for his family with an annual salary of USD 125,000, plus 30
percent hazard pay, the employee was survived by his spouse and two
Thanks to coverage through Clements’
DBA policy, the family received financial assistance following the NGO
employee’s unfortunate passing. DBA coverage provided benefits to the family of
the deceased, including: funeral expenses and lost wage death benefits of $1325
weekly, which is the maximum allowed by DBA.
NGO Case Study in Global Risk Magazine
About the Firm -
Clements Worldwide is committed to supporting
employees and missions with the goal of improving the lives for the most
at-risk populations around the world. The firm has garnered detailed
insight into the risks nonprofits and ngo’s face, ranging from how they move
supplies in high risk countries like Afghanistan to providing comprehensive
medical coverage with medical evacuation standard to kidnap & ransom
policies with no country exclusions.
Clements & Co.
are also continuously improving the insurance for nonprofits and NGOs to
ensure the safety of employees and their assets. This includes claims
only fleet models where you self-insure. Custom emergency evacuation policies
are also available, and can be added to an existing kidnap
and ransom policy, and well as allows for an evacuation for
multiple types of emergencies including political upheaval, security issues,
natural disasters, or epidemics. Clements is always on hand to provide you with
direct assistance and help you analyze your best options for NGO and nonprofit
insurance coverage by assessing which risks are best transferred via
insurance. We hope to be a partner in your overall NGO or nonprofit risk
management strategy and help you to create emergency & contingency plans
for any risk type. We can help you ask the questions that will ensure
your ongoing operations to support your mission.
- Select Data from the Clements Worldwide RIsk
- Clements Worldwide Risk Index 2017
Data from the Clements Worldwide Risk Index 2017
- Clements Worldwide Risk Index Summer /
NGO’s (2) - Proshare
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