As a Risk Management Consultant and Insurance Broker for nonprofits, it feels like every day brings a new set of guideline and declarations. Every organization is trying to pivot, get creative, stay in front of their audiences and donors, and figure out what the long game looks like. As I talk to my clients about their immediate and future needs as it pertains to insurance and risk management in the face of COVID-19, one question is constant:

“How can I save money right now”

Insurance is a huge line item in an organization’s budget, and now is the time to properly right-size your exposure for the upcoming renewal term and/or align your current policies to fit your exposure. Below is a list of common items we are doing for our clients to help lower their insurance premiums and ensure they are covered properly during the pandemic.

Commercial Package (Property/General Liability)

You have most likely discovered that Business Income/Interruption will not be covered for COVID-19, but there are still a whole host of other perils you can be exposed to, such as fire. Now that performances are cancelled, ensure you are not over insuring your limit. Your Business Income limit should equal 12 months of net income + extra expenses (such as renting new office & rehearsal space while you are rebuilding from a loss.)

Ask your broker to review your General Liability rating schedule. Have you ceased programs that you are being charged for, such as teaching artists in schools? Insurers rate your General Liability on different metrics (some are on square footage, some are on payroll, some are on # of admissions/tickets or # of children served). General Liability is not typically auditable, so you do not want to be rated (therefore, paying) on a number higher than your actual exposure.

Workers’ Compensation

Staff may be laid off or furloughed, but you are paying monthly premium installments based on estimated payroll for the year. If this number now looks significantly different, see if you can make a mid-term adjustment rather than wait for the annual audit to true-up these numbers. The class codes assigned for opera companies have high rates, so this can translate to significant savings right away.

Many insurance companies offer “Pay As You Go” installments rather than equal monthly installments. It requires your payroll provider to upload the actual payroll figures each month, but you will only pay premium on what your actual payroll was from the previous month. See if you can switch to this mid-term (some cannot
accommodate this), or switch to this method at your renewal. If your current provider does not offer this at all, it may be time to find a new carrier who will.

On the flip side, are you doing anything new from an exposure standpoint that is not already contemplated in your policy? Alert your broker if you are doing any COVID relief efforts such as having your costume shop sew masks, or staff spending a certain amount of time per week at a food bank. These new exposures may need to be added to your insurance.

Volunteer Accident

You most likely carry a policy to cover your volunteers if they are injured, since they are usually not covered on your Workers Compensation policy. The policy is rated on the number of active volunteers, so ask the underwriter to do a mid-term adjustment based on current projections for the year.

Foreign/International Package

It is highly unlikely that your staff will be traveling overseas for work related travel for the foreseeable future, so there are a few options to address this:

1. Do not renew the policy when it comes up for renewal, and when travel resumes, add it back. Underwriters understand the situation. (But make sure when you add it back, that your broker aligns the expiration date to your other policies, so it is not off-cycle).
2. Keep it in place but advise no planned trips, which should drop it down to a minimum premium (usually around $2,500). In the case that someone travels overseas for work and does not tell you, you are still covered. This is more of a peace of mind strategy.

Cyber & Media Liability

Many organizations are turning to technology as way to stay in front of their audiences. If you do not carry a full Cyber Liability (including Media Liability), you need to put one in place immediately. From a Risk Management standpoint, ensure
your agreements allow for live-streaming and podcasting if applicable to your organization.

Ask your broker

Insurance companies understand that business is not usual, however, some are more flexible than others. Ask your broker how y our current carriers are addressing exposure changes and premium relief options for policyholders.

States like California have required insurance companies to offer a refund or reduction in insurance premium for all policyholders while the Shelter-in-Place order is in effect. Other states will undoubtedly follow suit, but it could be several months before policyholders receive their share which will most likely come in the form of a credit to a future payment.

For more information, please contact Lauren Erickson, Assistant Vice President, at 415.426.6656 or lerickson@G2insurance.com.