By 7.4 min read

Picture this: you’re running behind schedule in preparation for a special event that’s been in the works for months now.  You’re in a rush to get everything completed because you want to knock it out of the park!

While borrowing a vehicle to pick up some volunteers to finish setting up, BAM, you rear-end the car in front of you. While everyone in your vehicle seems to be shocked, but without injury, unfortunately, it’s not looking that way for folks whose car you just hit.

Your heart begins to sink into your stomach.  While opening the door to go check on them, your mind naturally becomes filled with thoughts of unknown legal issues and financial obligations, and admittedly, your event plans become the least of your problems at this moment.

Though I hope you never have to experience an incident like this, the truth is, it can happen in an instant even in the most controlled environments.  Consequently, too many church and nonprofit leaders wait to prepare for probable accidents until they find themselves in the middle of one.

Don’t let that be you!  That’s why it’s so important to adopt a risk management mindset and audit your insurance plan regularly to ensure you have your bases covered.

Sure, reviewing your insurance with a local independent insurance agent may sound like the last thing you want to be doing, but it can be invaluable in the short and long term for your church, nonprofit or human service organization.

When auditing your insurance (usually done before your insurance renewal), you’ll want to review the following aspects of your nonprofit or religious organization:

  1. Changes to your organization’s leadership structure (including key employees or board of directors).
  2. Updates to your assets and property (such as selling a vehicle or purchasing a building).
  3. Modifications to your operations, program offerings, or events.
  4. Adjustments to your financial picture, including revenue streams and expenses.

Though insurance should be a last resort option for protecting your belongings, people, and reputation, conducting an insurance audit will allow your organization the opportunity to review the risks associated with your operations.

Here are the hidden benefits to reviewing your insurance plan on a regular (at least annual) basis:

Benefit #1. Avoid Being Underinsured or Overinsured

While subtle changes to your assets, financials, or operations may not seem significant in the grand scheme of things, they can have a greater impact on your insurance than you might think.  Reviewing your commercial insurance plan will help you avoid being underinsured or overinsured.

In theory, property insurance is designed to restore you of any financial losses resulting from sudden or accidental damages to your property.  Now, your policy should seek to “make you whole”, restoring your property to the same condition that it was before the loss.

Similarly, liability insurance is intended to protect your church or nonprofit should you be held liable for causing personal injury, emotional injury, or financial damages to another party.  Without the proper coverage, there could be a gap in your coverage and gaps are not good!

That said, your insurance coverage should protect against the risks that are specific to your organization – nothing more, nothing less.

If you’re underinsured, you will run the risk of being responsible for paying a claim out of pocket that’s not covered by your insurance carrier (and trust me, you don’t want that much responsibility!).

On the other hand, if you’re overinsured, you may be weighing your budget down year over year with coverages that are excessive or aren’t necessary nor relevant to your organization.  I know this all sounds like a crazy balancing act, but it doesn’t have to be and you don’t have to know it all.

The single greatest way to gain confidence that your insurance plan provides personalized protection is to work with a church or nonprofit insurance specialist, as opposed to the generic, one-size-fits-all insurance agency.  They’ll be your guide so you can focus on what matters most!

Benefit #2. Ensure Appropriate and Affordable Premiums

Now that you know the possible coverage implications when auditing your insurance, I’d like to highlight the financial implications as well.

Although churches and nonprofits don’t always have the largest operating budgets (go figure, right?), cutting corners on your insurance plan to save a few bucks may not play to your benefit in the long run.  That’s because not all insurance policies are created equal, so choosing the cheapest insurance option doesn’t mean it’s the best financial option for your organization.

On the flip side, that doesn’t mean that the most expensive insurance option provides the greatest level of coverage, so it’s important to be mindful of what coverages you’re paying for!

When it comes to ensuring your religious or nonprofit organization has appropriate and affordable insurance premiums, it’s important to keep in mind how insurance premiums are determined, as well as having a confident grasp on the scope of your insurance coverage.

Partnering with an independent insurance agent that has a great understanding of how churches and nonprofits operate will be your best bet to guarantee that you have the most appropriate insurance premiums with the most personalized insurance coverage on the market.

Benefit #3. Ease Other Insurance or Financial Audits

Depending on which state your organization operates in, such as Michigan, there may be mandatory auditing that is required.

In addition, different insurance carriers often conduct audits for verification that proper coverage is in force.  These audits may play a role in the amount of coverage and policy premiums provided.

Lastly, your church or nonprofit may be required to present financials to your board of directors, in which a third-party audit is be conducted and reported to the public through charitable reporting agencies like GuideStar or Melissa Data.

Along with the financial outlook of your religious organization or nonprofit, you may be requested to conduct an audit to verify the following information:

  1. Payroll Numbers
  2. Students Enrolled
  3. Volunteer Participation
  4. Special Events
  5. Sport Activities
  6. Other Special Conditions

If your church or nonprofit ever receives an audit request that you’re unsure of or unfamiliar with, just reach out to your independent insurance agent to help you navigate the auditing process.

Benefit #4. Opportunity to Shop the Market for the Best Options

Let’s face it: the insurance industry is an ever-changing landscape of niche insurance carriers, with up and coming insurance products, and constant fluctuations in pricing.

Because there are many variables when it comes to insurance, it’s always a best practice to explore your insurance options in the marketplace so you can be confident in your insurance plan for every renewal.

When it comes to reviewing your options in the market, choosing to work with an independent insurance agent will always ensure you have the most options.

While independent insurance agents maintain the capability to quote with a variety of insurance carriers, captive insurance agents are obligated to underwrite with a single insurance company and therefore, are unable to shop the market for you.

Benefit #5. Empower Timely and Informed Decision Making

I’ll be the first to say that church and nonprofit leaders shouldn’t be insurance experts; that’s what insurance agents are for!

That said, it is important for the overall financial health of any community-minded organization to regularly review their insurance plan; this way, leaders can understand the scope of their insurance program so that they can make the most informed, timely, and best decisions for the future of their organization and its mission.

Final Thoughts on Auditing Your Insurance

When it comes to ensuring your church or nonprofit insurance program is working at its best, considering reviewing it annually with your agent.  To recap, you’ll reap these benefits:

  1. The avoidance of being underinsured or overinsured.
  2. Appropriate and affordable insurance premiums.
  3. Eases the process of other insurance audits.
  4. Creates an opportunity to ensure you have the best insurance in the market.
  5. Empowers leaders to make timely and informed decisions regarding their insurance and risk management program.

As with anything in life, it’s not good enough to just stop at learning something new – we must take action and apply it in our lives to experience the benefits.

These benefits are on the table for every single leader who’s willing enough to step beyond reading this article to evaluate their insurance plan, or better yet, create a process or system for reviewing it regularly.

If you’re a driven church or nonprofit leader who wants the best for your organization and its mission, I challenge you to go the extra mile to ensure your mission is protected.  In the meantime, if there’s anything that you may need help with when it comes to your insurance, feel free to reach out anytime — I’d be happy to help!

About the Author: Steven Elkins
Steven Elkins is the vice president of CTG Insurance.

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