As nonprofit organizations struggle to balance their missionsagainst their budgets, they often feel as though they have atwin-size sheet for a king-size bed.

Grants and private contributionsare fewer and smaller, and public funds are short. Meanwhile, theneeds that these organizations respond to are as great as ever, andoften increasing.

Nonprofits have learned to economize: cutting overhead wherepossible, using more volunteers to extend their human resources andeven merging with other organizations that share a similarmission.

Nonprofits also can look to their insurance and risk-managementexpenses to economize by preventing future expense increases. Butfew nonprofit leaders are aware of how to do so. Insurance agentsare in the best position to let nonprofits know about an innovativeway to be efficient with insurance and risk-management budgets.

Prevent claims to hold down premiums

Accidents will happen. A General Liability insurance claimarising from an incident involving a nonprofit's volunteer candrive up the organization's GL premiums in subsequent years.Likewise, in states where volunteers can be covered by Workers'Compensation, a volunteer's injury can have a similar effect onWorkers' Comp premiums.

These increased insurance expenses, as well as any deductibleexpenses, can make that twin-size sheet seem even smaller to thenonprofit organization.

But informed agents can advise nonprofit organizations of analternative approach that puts claims in different places (and thushelps keep GL and Workers' Comp insurance premiums fromincreasing). This approach involves using alternative coverage forvolunteers. The nonprofit might, in fact, be better off not relyingon its GL policy or Workers' Comp policy to insure volunteers.

Shielding General liability and Workers' Compcoverage

Here are two strategies for agents and brokers to consider asways to shield a nonprofit's GL and Workers' Comp policies againstpotential claims:

• A Volunteer Liability policy can help prevent claims againstthe GL policy, should a volunteer injure someone or damagesomeone's property while volunteering. Experience shows that if theinjured party knows that adequate coverage is available through theVolunteer Liability policy, a claim against the organization's GLpolicy is much less likely than it would be otherwise.
• A Volunteer Accident Medical Reimbursement policy can be anattractive alternative to Workers' Comp coverage. Although it isnot a true apples-to-apples comparison, the available limits andpolicy conditions of an accident policy can make it an acceptablealternative to the expense of Workers' Compcoverage. 

While an agent must consider the ramifications for eachcircumstance, these strategies can protect the organization's GLand Workers' Comp coverage, potentially providing a much betteroverall cost profile for the nonprofit. The cost of VolunteerLiability and Accident policies can be a manageable one even fornonprofits on tight budgets.

Additionally, a Volunteer Liability policy and an accidentpolicy fill important gaps that exist with GL and Workers' Comppolicies: They protect volunteers from the time they leave homeuntil they return.

Preventing claims in the first place is the best way to keepinsurance costs low. But since accidents do happen, helpingnonprofits allocate claims to the most appropriate, cost-effectivecoverage is a step in the right direction. The agent or broker whoprovides progressive thinking and solid alternatives can help thenonprofit devote more of its scarce resources to its mission.