With the COVID-19 pandemic continuing to impact our lives in unforeseen ways, nonprofit and human service organizations have had to modify operations in numerous ways. Guidance from state and federal health authorities and state mandates continue to evolve, necessitating nimble action from boards of directors and management.
Many organizations have realized significant business income losses and incurred unexpected expenses due to closure mandates at the state or local level. At the same time, other nonprofits are facing unprecedented demand for the services they provide. Unfortunately, despite organizations’ best efforts to keep staff and members of the public safe, it may be impossible to avoid being the target of insurance claims or litigation related to the spread of COVID-19.
Creating and maintaining documentation of your organization’s response, and following these best practices, can help you protect your organization’s rights related to lost income and extra expenses while mitigating potential liability due to the potential spread of the virus.
1. CREATE A CONSISTENT FORMAT FOR DOCUMENTATION (IDAR)
Even if you do not believe your lost income or extra expenses incurred are compensable under your business income insurance policy, documenting certain information and submitting claims can protect your rights. The “IDAR” acronym is a handy way to remember the information you should capture.
- Item or expense incurred
- Date of the loss
- Amount of the expense or loss
- Relationship to the pandemic
2. TRACK PRECAUTIONARY MEASURES
Has your nonprofit or human service organization implemented a mask mandate or added hand sanitizer stations? Are employees subject to periodic temperature screenings? Have employee time-off policies been updated to address COVID-19 specific absences?
Chances are, you have made some changes as a result of the pandemic. Now is the time to use “IDAR” and document the actions taken and how new policies and procedures were communicated to staff and the public (as applicable).
3. BE CONSISTENT
Creating a new policy or procedure for your organization is good, but it will not mean much if you are not consistent with its adoption or compliance efforts. If you operate out of multiple locations, create policies that are workable in all of them, rather than using one set of procedures in one location and a different set in another.
Similarly, conduct periodic self-audits to confirm staff members are adhering to the new requirements and be consistent about addressing instances of non-compliance. Keep track of these efforts and actions too, as part of your risk mitigation documentation.
4. PUT SOMEONE IN CHARGE
Documentation of impacted business income and extra expense losses is most effective when there is one responsible person (or role) in the organization. If your nonprofit or human service organization has a separate Human Resources or compliance/risk function, it may make sense to house responsibility there. As with any policy or procedure, have a system of checks and balances to confirm records are maintained as intended.
The only certainty when it comes to COVID-19 is, arguably, that nothing is certain. As your organization continues to adapt to the “new normal”, documenting losses incurred, policies and procedures implemented, and actions taken will provide you with a framework designed to stem losses and mitigate risk.
At Lamb Insurance Services, we work exclusively with nonprofit and human service organizations of all sizes, helping them reduce risk through property and liability protection, employee benefits solutions, and more.