May 23, 2024
In the first part of our series, we explored the crucial policies that will keep nonprofits protected. Part two is our essential guide to reading your policy. In our third installment, we explored how to keep your policies working for you. And part Four? This is the one to read if you can’t get to anything else.
We get it, there’s a lot to do. Maybe you have a solid team in place that you trust or you’re tending fires far greater than cozying up to your current policies. But even if you’re plate is full, learn about these three insurances “musts” and you’ll have a leg up:
Certificate of Insurance (COI): Moving? Hosting an event? Serving alcohol? You most likely need to show a COI. This is the most common reason you’ll call your agent, as COIs are needed almost any time you engage in business that has some risk. A COI is a document that provides evidence of your insurance coverage and summarizes the key aspects of your policy, including types of coverage, policy limits, and effective dates. It’s often needed when entering into contracts or agreements with third parties such as landlords or vendors. If you get a request, you’ll also likely receive a Sample COI that outlines the necessary coverage. And while they can be produced quickly in an emergency, it’s best practice to notify your agent well in advance if you need a COI. And remember, risk can flow in either direction! Be sure to ask for a COI as proof of coverage if you’re doing work on behalf of another entity. Your general counsel and broker can help you understand what to ask for and when.
Decode The Slang of Fractions: What on earth is a “one over three?” Well, when it’s in the context of insurance, a “one over three” typically describes the policy limits of a liability insurance policy. This shorthand indicates the limits of coverage in millions of dollars for per-occurrence and aggregate limits. The “one” in "one over three” represents the per-occurrence limit of the policy, which in this case is $1 million. It means that the insurance company will pay up to $1 million for any single claim. The denominator "three" in "one over three" denotes the aggregate limit of the policy, which is $3 million in this scenario. The aggregate limit is the total amount the insurance company will pay for all claims during the policy period (usually one year).
So, a “one over three” means the insurer will cover up to $1 million per individual claim, with a total coverage cap of $3 million for all claims within the policy period. This type of policy structure is commonly used in liability insurance, such as General Commercial Liability or Professional Liability insurance. Bottom line? Know your ratio and if it’s too low, work with your broker to ensure you have adequate coverage.
Finish Your Homework Before You Party: Holding a gala for the first time? Sending staff abroad? Anything beyond your typical “business as usual” may need a special look since you may have specific exclusions in your coverage. Before engaging in anything outside the ordinary, call your insurance broker to discuss whether you need a rider that provides separate coverage. The added premium is generally small and well worth the cost to avoid the massive headache if you’re not actually covered.
When you have a moment, please take an afternoon to read over your policies. But until then, use these basics to help safeguard your organization and ensure that you're prepared no matter what comes your way.
