Insurance policies all have exclusions from coverage. Nonprofit executives found out the hard way that despite buying every available coverage, COVID-19 or other such events were out of the coverage area.
The Nonprofits Insurance Alliance (NIA), a group of 501(c)(3) nonprofit, tax-exempt insurers, is now allowing member nonprofits to purchase protection from liability claims stemming from communicable disease exposure.
The new coverage was started by the Santa Cruz, Calif.-based alliance in response to the COVID-19 outbreak. According to a statement from NIA, the property and casualty insurance market has restricted communicable disease coverage in light of the pandemic.
The NIA’s Communicable Disease Coverage provides $250,000 of coverage for costs incurred, property damage, losses and defense fees. The coverage is an adjunct to commercial general liability insurance, which provides coverage for actions such as slips and falls – or in this case, exposure to a disease.
The coverage does not extend to employee-related claims stemming from communicable diseases, such as a lack of personal protective equipment (PPE) or improper equipment training. When employees are involved, cases become workers’ comp issues. The coverage also does not provide any recompense for lost revenue due to cancelled fundraisers or other events.
“This is for bodily damage on the premises of a nonprofit to a non-employee,” NIA Chief Marketing Officer Ren Agarwal said.
The $250,000 is an annual aggregate, as opposed to applying to every lawsuit that might be filed against a nonprofit within a calendar year.
The NIA launched its coverage at the beginning of this year, when insurance companies and reinsurers began excluding communicable disease coverage from their policies. “We said, ‘we still have to protect the nonprofits,’” Agarwal said. “They are still protecting the community during the pandemic.”
Costs for the new coverage vary, as each policy is underwritten individually. Generally, the additional coverage costs run around 10% of a nonprofit’s general liability premium, with an annual minimum of $3,750. Only nonprofits that hold commercial general liability with the NIA are eligible.