Not too many nonprofit managers would think about operating without insurance, but having insurance is only part of the picture.
During the 2013 Risk Summit sponsor by the Nonprofit Risk Management Center, Mark T. Hessel of HCA Asset Management LLC emphasized the importance not only of having insurance but also of having effective insurance records.
Hessel said it is vital to clearly define goals and objectives. In order to do that, he said, it is essential to:
- Know the organization’s requirements. For insurance purposes, this means knowing what underwriters want or need. It is also good to know when the last full onsite appraisal of the property was done.
- Identify timelines or deadlines. The obvious first question is, When is our renewal? When does an agent, broker or underwriter need updated info? Add a cushion for contingencies.
- Clearly state a realistic appraisal scope. Is it necessary to include all locations? Which methodology is best, detailed inventory (most costly, provides detailed proof-of-loss), a tally approach (less costly, limited proof-of-loss), modeling (least costly, no proof-of-loss).
- Explore options for perpetuation of records. A desktop update means changes in property are submitted annually to an appraiser, trend factors applied to unchanged sites, revised reports sent to the insured (typically timed with renewal) and a common solution for smaller entities or those with few changes. An onsite update service incorporates the desktop update but also has an onsite component for new or changed locations, good for larger entities or those growing rapidly with many property transactions.