Insurance Shopping: Questions and Consideration

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While a thoughtful policy and procedure manual will help manage an after-school program’s risk, the program should also consider what kinds of insurance it needs, according to a Utah Department of Workforce Services manual entitled “ABC 123, Starting Your Afterschool Program.”

Melanie Lockwood Herman, executive director of the Nonprofit Risk Management Center urges programs to think about the activities the program offers and what could go wrong when deciding whether to purchase insurance. They should also contemplate what they can afford, how long the activity will last, and whether they are the best entity to manage the risk and limit the harm, she advised. In those instances where the program is using another organization’s space, for example, the host organization may be better suited to carry insurance on the property.

Checking the state’s child care resource and referral agency or child care licensing department will also tell the program whether there are state-specific insurance coverage requirements, according to the manual.

When shopping for insurance, the manual recommends asking the following questions created by the National Network for Child Care:

• What are the requirements to be insured? Does my program qualify?

• What is covered by the policy?

• What risks are excluded from the policy?

• How long does the policy last?

• What are the liabilities and medical payment limits?

• How much are the premiums? Are there deductibles?

• How do I file a claim?

• What is the company’s financial reputation?

• What is the company’s claim and service reputation?

• How knowledgeable and helpful is the insurance agent you speak with?

Dan Bier, underwriting manager at the Philadelphia Insurance Company, specializes in nonprofit coverage for entities like YMCAs and also suggested that programs find an insurance agent who is knowledgeable about their type of program and the activities it offers through recommendations from similarly-situated nonprofits or insurance trade magazines. Program or agency leaders, he said, should also connect with similar organizations in their area to find out the types of coverage they carry and consider hiring a “loss control” service (which may be available through their insurer) to survey and make recommendations regarding potential program exposures.

Many after-school programs will have some insurance coverage, so when assessing the coverage they have or considering new insurance, they should look at the provisions included in their general liability coverage, said Bier, which should cover bodily injury, property damage and negligence. Typical general liability policies, he said, don’t cover acts of abuse or molestation so some programs may consider getting additional abuse coverage. If the program includes athletics, it should consider an accident policy, which would cover instances where a child was injured on the property and if the program employs nursing or other licensed clinical staff, they should look into professional liability coverage, he said. They should also speak to their insurance agent about whether coverage for their nonprofit board of directors and officers is appropriate, he said.