Does your nonprofit customers have EPLI on their radar?

Nonprofits are built around people. Employees, volunteers, board members and community partners all play an important role in helping an organization fulfill its mission. But wherever people are involved, there are also potential employment-related risks. For agents working with nonprofit organizations, Employment Practices Liability Insurance (EPLI) can be an important conversation, even for smaller nonprofits with limited budgets and lots of volunteers.

Nonprofits can face employment risks

A nonprofit’s mission may be different from a traditional business, but its employment exposures can look surprisingly similar. Nonprofits can face allegations, such as wrongful termination, discrimination, harassment, etc. And the organization doesn’t necessarily have to lose a claim to experience financial consequences. Legal defense and other costs associated with responding to an allegation can put significant pressure on a nonprofit’s already limited resources.

That’s where EPLI deserves a closer look.

“We’re a small nonprofit.” This is one of the most important conversations for agents to have. Nonprofits often have limited funding and competing priorities. Paying employees, funding programs, and serving their communities may understandably come before adding another insurance policy.

Small budget doesn’t necessarily mean small exposure. A nonprofit with five employees can still face an employment-related allegation. And many smaller organizations don’t have large HR or legal departments to help navigate one.

EPLI may not always be the first coverage that comes to mind for a nonprofit, but that doesn’t mean the exposure should be overlooked. The right coverage depends on the organization’s specific operations, policy terms, and circumstances.

Don’t forget the volunteers

Volunteers are often the backbone of nonprofit organizations. They may help with fundraising, community outreach, administrative work, events, or direct services. That creates another question agents should ask: How does the nonprofit’s insurance program treat its volunteers?

Don’t assume volunteers are automatically covered under EPLI. Coverage depends on the policy’s definitions and terms. Instead, ask how volunteers interact with employees and the organization. Do they supervise others or hold important roles? Work directly with partners or customers? Have responsibilities that could lead to complaints or allegations? Understanding those details can help uncover potential coverage gaps.

A waiver isn’t a replacement for insurance

Many nonprofits use volunteer agreements, waivers, codes of conduct, and training to help manage risk. These are valuable risk-management tools. But signing a waiver doesn’t necessarily prevent a claim or eliminate the cost of responding to one. Here’s one way to think of it:
Risk management + insurance = a stronger approach to protecting the organization.

The conversation doesn’t have to be “waiver or insurance.” It can be “You have good practices in place. Let’s make sure your insurance program supports them.”

5 questions to ask your nonprofit customers

If you have a nonprofit customer or prospect, start with these questions:
1. How many employees and volunteers do you have? (The size and makeup of the organization can help identify potential exposures.)
2. What do your volunteers actually do? (Their responsibilities can be just as important as their number.)
3. Do you have written policies for harassment, discrimination and retaliation? (Strong internal policies are an important part of risk management.)
4. How does your current insurance policy define an “insured”, if any? (Pay particular attention to how volunteers and other individuals are treated under the policy.)
5. Have your staffing, programs or volunteer operations changed since your last insurance review, if any? (As a nonprofit grows, its insurance needs can change, too.)

The bottom line for agents

Your nonprofit customers may be focused on funding their mission, not thinking about what could happen if an employee or volunteer makes an allegation. That’s where you, their agent, come in. Ask the questions. Understand the organization. Then help your customers decide what protection makes sense. A nonprofit may have a limited budget, but its exposure doesn’t necessarily have to be limited to its budget.

Ready to place a hard-to-write risk or not sure where to get started?

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