Non-Profits are special entities that require special insurance needs. President of CLH Insurance, Chuck Hembree, discusses what NPOs need to be on the look out for in regards to insurance and how CLH has carved out a niche in insuring the non-profit sector.
Below is a transcript of the episode, modified for your reading pleasure. For more information on the topics discussed in the episode, see the links at the bottom of this post.
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Grant FINLEY: Welcome to another edition of Your Insurance Connection Podcast. I'm your host, Grant Finley. Joining me today, Chuck Hembree, the President of CLH Insurance. Chuck, how are you?
Chuck HEMBREE: I'm doing well today, thanks.
FINLEY: Great. Today, Chuck, I was hoping we could jump into the non-profit sector. It's something that certainly has some unique needs. It might be a little bit different from traditional commercial lines, etc. and CLH has actually built a pretty strong reputation in the non-profit area. So, there's a lot there that I think we can get into.
HEMBREE: Very much so. Not-for-profits have a lot of similarities to commercial lines, but inside of that they have some very unique needs due to their not-for-profit status with the government, the treatment of their assets, and even their management and their government structures. Because of that, they have some very unique needs liability-wise. But, if you think about churches, sometimes they have tremendously different needs property wise too. We see these beautiful, ornate churches and simpler ones as well and we need to have the ability to meet the needs of all those. When you think about not-for-profits, 501(c)(3)s are normally the things you think about but there are over 50 different not-for-profit classes and so that's where we've been able to develop an expertise. Understanding what each of those are and their unique needs as opposed to writing a great commercial lines protection policy.
FINLEY: So, can you dive in in a little more detail with some of the practical differences between a commercial line and a church or non-profit? What would one need that the other wouldn't need?
HEMBREE: Well, that's a great question because when we think about commercial lines, we're thinking about someone who produces a product or provides a service. With not-for-profit, they are providing a service but its in an entirely different realm. They're not trying to make sure that they keep the bottom line that's there. They're a lot more dependent sometimes on donations and outside support. These can be churches, colleges, schools, ministries, chambers of commerce, the charities that we think of like United Way, drug rehab centers. There is a whole spectrum of social service entities that are in the not-for-profit range and they are very diverse and have a lot of different needs.
FINLEY: Can you credit one thing over another as to how CLH has gotten a strong hold in that not-for-profit sector?
HEMBREE: Well, sometimes that just kind of happens because of who you are. We've always had a passion for working with churches and ministries but we've also always been involved in associations and chambers of commerce. Over the years, you learn to understand what they're expectations are, what their needs are and we decided this is a natural place for us to do business where we have a passion for protecting these valuable, valuable entities and we have a great amount of experience throughout our entire staff in what those entities need.
FINLEY: So, we've touched on it a little bit but let's dive into it a little further. We've talked about non-profits and how unique they are. One of the unique things about them is their reliance on volunteers. I'm sure there are probably some things in there that might be a little tricky when you dig into it a little bit, so what can you say about some of the things that a non-profit would need that's unique that they should be keeping their eye out for?
HEMBREE: Well, especially along that line because they depend a lot on volunteers. Think about hospitals and what we used to call candy stripers or volunteers in the gift shops and as nurse's aids but any not-for-profit organization tends to have a lot of volunteers that it needs and other people who really feel that cause and they want to contribute. But they'll also have the employee staff too or the staff that helps direct and do the day-to-day activities. So, we have to think about it in a little bit different manner than we would - even an insurance agency here, where we have employees who are solely devoted to their sole focus of coming in day-to-day is on the customer and making the agency successful. Well, the staff has the main job of doing that but they utilize the services of volunteers and those volunteers need to be protected and they need to have liability because of their actions. Volunteers, just like all of us employees, make mistakes. They cause bodily injury and property damage. If we don't have a policy written correctly that includes the actions of volunteers and doesn't properly protect them, then they are a very valuable asset of the organization that we haven't dealt with properly. So, that is a big part. Another part is just the governance structure that I mentioned before. All not-for-profits have to have directors and officers coverage because there are outside board members who are helping oversee the actions of the not-for-profit and it's required by most of their bylaws and covenants and statutes that they have that board - well how do you protect them when they're not doing the day-to-day work? They may not have the exposures to bodily injury and property damage like an employee or volunteer would but they can also have liability suits against them so what type of definitions do we need to have in a policy that will protect them? Thirdly, we still need to think about employment practices liability just like we would for any commercial lines entity to protect the rights and the ability of the employees to work on a regular basis without discrimination and also to protect the company or the organization from the acts of its employees. So, those are a couple of unique needs that we need in liability. Now, directors and offers specifically covers just those board members and staff who give direction and vision to the entity, organization or ministry. They're not going to be sued for bodily injury or property damage so that policy needs to have several definitions in it that are not in a regular policy like improper financial oversight, wrongful decisions, those types of definitions are not in a general liability policy and this helps us to be able to protect those individual board members well. It's and important one because I've heard a lot of agents say, "Well, if you're not taking money for serving on the board," which with not-for-profits is pretty common, "then you're covered underneath your homeowners because it covers any board position that you're not receiving income for," and they are exactly right...for all of the definitions that they'll never get sued for. The homeowners just doesn't have those. It doesn't have improper oversight financial mistakes and wrongful decisions. I know in my home I've made a lot of wrong decisions - can't go to my home insurance for that! So, D&O is essential. Employment practices liability covers wrongful firing, wrongful hiring, breach of contract, and some discrimination too. So, those types of definitions are in policies that are not in a general liability policy and can cover, but does not always cover volunteers.
FINLEY: Alright, Chuck, and I'll wrap it up with this last question. We kind of talked about it before with the niche that CLH has, but what expertise do you think CLH has that others don't allowing us to provide superior service to not-for-profits?
HEMBREE: That is a critical question because a lot of agencies concentrate in different areas and one of our areas is not-for-profits. Besides just having a passion for not-for-profits, we've spent a great deal of time educating ourselves and gathering the tools that we need in order to service these clients in a superior way over other agents. We've developed the risk management tools that non-for-profits need. We know these entities inside and out. We know their structures, their liability needs, their property needs and we've developed and gathered products that can respond to those that some other agents cannot do. For instance, think about sexual abuse and child molestation coverage. Some major carriers don't even provide this, yet they're writing coverages on churches and community centers. How in the world can they provide the need there without having that great coverage? So, we really have to understand, what are the exposures that these not-for-profits have? Because we're all about preserving their great service to the community and if we don't do it right and we haven't prepared well then we're doing a disservice and really oughta get out of the business. The other things that we have worked with is trying to get the tools that we need to measure exactly what is needed when we look at those monstrosity buildings that are built in Gothic architecture. Not all building valuations can address that. We have the evaluation tools that can help us in that and we deal with companies that also have expertise in this area to help us. No one knows it all but we think we're on the top shelf in being able to provide the very best products, services, risk management and relationships to not-for-profits.
FINLEY: Well, I think that will do it for this episode, Chuck, but I do want to thank you one last time for your insight and your expertise with the non-profit sector.
HEMBREE: Grant, thank you for letting us talk about this. This is very important to our agency because we love protecting these insureds and I appreciate the chance to discuss it with you.
Your Insurance Connection podcast can be heard on iTunes and Stitcher or by visiting clhins.com/content/podcast. If you like what you’ve heard you can support this podcast by rating and/or sharing it on your social platforms. CLH Insurance is a “Trusted Choice”, independent agency servicing Missouri, Kansas and Illinois. For more information on CLH Insurance, visit clhins.com or call 636.391.0700 to speak with an agent. Until we connect again, thanks for listening.
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Show Notes - Where you can learn more about the people and ideas discussed in this episode.
Directors & Offices Coverage
Employment Practices Liability
Improper Financial Oversight