Why Can’t I Get a Quote for Non-profit Insurance?
Public liability insurance and employers’ liability insurance are essential covers for non-profit organisations. If you have trustees, you may need trustee liability insurance. If you run a non-profit organisation, you may have been refused a quote or been charged an exorbitant price for these insurance covers.
Why Can’t I Get a Quote for Non-profit Insurance?
Non-profits are not legally obliged to buy professional indemnity insurance, but it is recommended. It can also be taken as additional cover for public liability and employers’ liability policies, but quotes are likely higher than those available to other clients. You may need specialist advice on this issue. The necessary cover will depend on your circumstances.
Historically, the insurance market has had many issues in providing more niche cover. That’s changed with recent regulatory changes and the arrival of specialist insurance companies. But even with this new, more competitive market, it can still be challenging to get cover for some non-profit organisations. Many non-profits are not eligible for the most readily available insurance. They don’t typically provide enough data to the insurers.
There have also been controversies in the industry issues regarding some well-known cases. Non-profit organisations attract fewer leads for insurance because they tend not to have as big a market. There are also rumours that insurers may be reluctant to take on these high-risk individuals or organisations.
Here are six reasons why you might not be able to get an affordable quote for non-profit insurance:
1. You’re a not-for-profit organisation that has charitable status.
If you are a not-for-profit organisation, there is often a process to become registered as a charity. If you have not been registered, you may be able to become registered if all the relevant documents are provided and if the registrar of charities is satisfied that your organisation’s purposes meet their charitable purposes test.
But even if your organisation does meet this test, there may be limited or no charity insurance available for your non-profit. Therefore, you should always check with an independent insurance broker when considering whether to register as a charity and what cover you want to take out.
2. You are an unincorporated association
If you run a not-for-profit organisation as an unincorporated association, incorporating it as a trust or a company limited by guarantee is worth considering. To be a non-profit organisation and not incorporate is increasingly uncommon and thus penalised by insurers.
3. You are only taking on volunteers and have few employees
If you are only taking on volunteers and know that there will be no employees, many insurers won’t want to provide public liability insurance for you. They might think that this makes any potential claim less likely because nobody could negligently injure someone else while acting in their official capacity or through the work they handle while working for your organisation.
4. You only have a small number of trustees
Insurers tend to shy away from insuring small numbers of trustees. There is no doubt that the insurance risk is still there, and these organisations may be more likely to cause an accident than larger ones, but there will be no backup in the event of an accident where a board member makes a wrong decision.
5. You are taking on high-risk volunteers
Under the same circumstances as above, insurers will sometimes ask you to justify why you think it’s justifiable for them to take on your organisation. They’ll want to see that you have sufficient funds or backing to handle any claim, which means that they may not be particularly interested in ensuring a group of volunteers.
6. You don’t have any governance in place
Many insurers will ask you to show that you have robust governance when considering whether to provide public liability insurance for your organisation. This may include putting together a constitution, appointing trustees and showing that appropriate checks have taken place.
Why Can’t I Get a Quote for Non-profit Insurance? To Conclude
Due to the nature of non-profit work, insurers are often hesitant to offer protection. Liability is often hard to establish, primarily if the charity does not function as a business and employs many volunteers. By making the changes listed above, you can increase the likelihood of being offered a reasonable deal. Still, it is recommended to speak with an insurance agent who can offer tailored advice.
Find out more about the importance of insurance here.
Other useful links about Business Insurance:
Is Professional Indemnity Insurance a Legal Requirement?
How Much Product Liability Insurance Do I Need?
Is Employers’ Liability Insurance a Legal Requirement?
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