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NAVREF offers a group insurance program to leverage the purchasing power of its members in order to obtain high quality insurance products at the best possible price. Policies specifically tailored to meet NAVREF members’ insurance needs are provided through an individual broker.

Some exposures may be covered by the Federal Tort Claims Act (FTCA) as a result of the VA-affiliated nonprofit research corporations’ (NPCs) unique relationship with VA. However, as private, independent entities, the NPCs still have exposures that are best protected by purchasing insurance. Detailed discussion of the FTCA and guidance regarding medical malpractice coverage.

NAVREF receives no compensation from the insurance program. Its only interest is helping members identify the best possible products at an advantageous price. However, the more members purchase a single product from a single broker and insurance company, the better the chances of negotiating better terms for every member. We encourage members to consider using the brokers identified below as they weigh various options.

Disclosure:  While NAVREF works with the NAVREF Insurance Program broker to identify possible exposures, NAVREF does not review every policy issued.  Please read your policies to make sure you understand the coverages provided and to ensure that the insurance companies are not adding exclusions which would render the policies ineffective.

Insurance Products

The best defense against adverse incidents is a strong program of risk management and good insurance. Risk management includes ensuring a safe working place, making sure staff are well-trained in all aspects of their jobs, implementing and following a system of internal controls, dealing with problems promptly, and constantly monitoring the organization’s activities to make sure it is not exposing itself and its employees to unnecessary risks. But no system is perfect. Adverse incidents occur in spite of the best systems of risk management and insurance is necessary to protect individuals and the organization against events that could have financial consequences.

Individuals working with the VA-affiliated nonprofit research corporations are generally aware that the federal government self-insures according to regulations or statutes such as the Federal Tort Claims Act. However, private sector organizations like the NPCs must purchase insurance products to acquire the same protection. 

NAVREF recommends that all members carefully assess their own exposures and identify insurance products to meet their particular requirements. The NAVREF Insurance Program broker is available to assist members with this process.  Members also are encouraged to obtain legal advice before entering into any new activities or programs that may put the NPC at risk. 

At a minimum, NAVREF recommends that all NPCs carry a professional liability package that includes directors and officers liability (D&O), and fidelity bond insurance. In addition, most organizations with employees are required by law to carry workers compensation insurance. These and other products to consider are listed below with brief descriptions.

Professional Liability/Directors and Officers Insurance

Professional Libabiliy/Directors and Officer Insurance policies combine the features of traditional directors and officers liability coverage (primarily intended to insure against employment practices suits) with errors, omissions and negligence coverage. This type of insurance is intended to protect both the organization and individuals associated with the organization from legal costs and judgments resulting from alleged improper employment practices as well as errors, omissions and negligence in the conduct of the organization’s business.

Some states have laws designed to provide nonprofit organizations, their board members, staff and volunteers with limited immunity from liability.  State coverage often has limits lower than a suit is likely to cost and may not cover all risks.  Conversely, some states require that nonprofits self-insure up to a specified level of insurance coverage and will pay only for legal costs or judgments that exceed that amount.

Generally, state programs cover only judgments, not the cost of defense. As a result, insurance is required to cover legal costs. A recent survey indicated that the average cost to an organization to defend an employment practices case is $111,000.  If your NPC is in a state that offers some immunity to nonprofit organizations (call your state Chamber of Commerce or state association of nonprofits to find out), NAVREF recommends that you consult Ms. Haberman and/or a local attorney with expertise in insurance law to determine what coverage may be needed.

NOTE:  NPCs should ensure that the list of named insureds is modified to include all “persons working on programs administered by the organization while acting on behalf of the organization at the direction of any employee, officer or the board of directors.” This covers any person working on approved foundation projects.  Because of the unique relationship of NPCs with principal investigators, they generally do not fit into the categories of insureds commonly named in insurance policies - officers, directors, employees and volunteers.

Expected main features:

Covers wrongful acts include:

Negligent acts, breach of duty, errors, omissions, misstatement or misleading statement
Infringement of copyright or trademark, or unauthorized use of title
Plagiarism, piracy or misappropriation of ideas
Publication or utterance of libel, slander or other defamatory remark or disparaging material or remark
Invasion or infringement of the right of privacy
Contractual liability and breach of contract
Coverage excludes:
 
Medical professional malpractice
"Claims Made" policy (covers only claims made during the period the policy is in effect)
Deductible: $2,500 - $5,000
Covered employment practice claims include:
 
Dismissal, discharge or termination
Employment related misrepresentation
Failure to employ or promote
Deprivation of career opportunity
Discipline
Granting or refusing tenure or promotion
Employee policies and procedures
Sexual and workplace harassment
Discrimination
Defense costs: Defense costs are included in limit of liability (choose a limit high enough to cover the legal costs as well as potential judgment costs)
“Insureds” include: "any past, present or future director, officer, employee, volunteer, board member or committee member as well as persons working on programs administered by the association” while “acting on behalf of the association at the direction of any employee, officer or the board of directors.”
Duty to Defend: Insurer has duty to defend (insurer pays for or provides attorney).
Estimated cost: Coverage is generally available with premiums starting at $1,500 with limits from $1 million to $5 million.
For an application Contact the NAVREF Insurance Program broker

Fidelity Bond:

A good system of internal controls (click here for more information on internal controls) is an organization’s best protection against employee theft or fraud. However, a determined employee may be able to find a way around even the best system of internal controls. A fidelity bond is an inexpensive way to protect an employer against losses resulting from fraudulent or dishonest acts by employees. The amount that can be recovered depends on the limits of the coverages provided by the bond.

Organizations need fidelity bonds for several reasons:

  • Some government funding sources require that grant and contract recipients obtain a fidelity bond. Increasingly, private sector funding sources are also requiring proof of insurance.
  • Organizations that offer employees 403(b) and 401(k) retirement plans are legally required to have ERISA insurance that covers a percentage of the plan’s assets.

 

Prudence dictates that it is a good idea to have a fidelity bond. Imagine having to explain to investigators that an employee embezzled $100,000 and the money to pay their technicians is gone.  The amount of insurance that your NPC needs depends on your total assets, your level of internal controls, how much money any single employee can access, the total number of employees, and the requirements of your funding sources. The NAVREF Insurance Program broker can help determine the coverage you need.

Main Features of the Travelers Property Casualty Crime Plus policy:

Coverage for various types of theft can be covered in one policy up to the same limit or separately scheduled: Employee dishonesty
Forgery or alterations
Computer fraud and electronic funds transfer fraud
Definition of Employee: Broad definition of employees includes employees that are leased, non-compensated, terminated (up to 60 days) and those employees that handle employee benefit plans
ERISA Coverage: Covers ERISA plans automatically

 

Click here for fuidance on what to do if you suspect employee embezzlement.

Workers Compensation

Workers Compensation insurance covers the medical bills for employees injured in the course of their employment and provides reimbursement for lost wages. Workers compensation also protects employees who contract a disease on the job. Employer liability is also covered in workers compensation policies to protect the employer against cases of common law negligence that result in worker injuries.

Workers compensation laws vary from state to state. Claims are adjudicated on an individual basis and the amounts collected can vary depending on the circumstances of the injury and state laws. In every state except Texas, most private sector employers must carry workers compensation coverage. And even in Texas, an employer can be sued for major legal damages so it is a good idea to know what your state requirements are and then insure against the major risks even if it means exceeding the legally required minimum.

In applying for workers compensation, you will be asked to group your employees in pre-determined job categories. The cost of coverage will be determined by each category’s rate and your payroll cost. It is important that you characterize your employees’ jobs correctly even if it means higher premiums. A claim may be denied for an incorrectly categorized employee and your NPC may be liable for the costs of treatment and lost wages. The good news is that if a large employer develops a history of low or no claims, its workers compensation rates may decline over time according to the state’s eligibility rating schedule.

The industry trend is to package workers compensation with other business coverages under a Businessowners Package Policy. This may include business property, general liability, business automobile, workers compensation and umbrella liability insurance.

The following states require that workers compensation be purchased directly from the state: Ohio, Washington, West Virginia, North Dakota and Wyoming. For NPCs in all other states, workers compensation coverage is available from insurance providers, usually as a component of a Businessowners Package Policy.

Workers Compensation Insurance Alert.  Some workers compensation policies may contain an endorsement that excludes coverage for employees who are “jointly” employed.  This is of concern because many NPC employees have VA appointments, with or without compensation.  NPCs should review their policies to verify that there is no exclusion for jointly employed personnel in the form or in any of the endorsements.  If the endorsement appears, contact your broker.

Other Coverages NAVREF Members May Consider

  • Business Property Insurance: Provides broad coverage for equipment, including computer hardware and software, and furniture owned by the organization up to a specified limit. Property coverage is written on a “special causes of loss” basis. This means that all types of losses are covered unless they are specifically excluded. You must read your policy to determine exactly which causes are excluded. However, typical exclusions include:
  • Ordinance or law (regulating the construction use or repair of property or requiring that a property be torn down)
  • Earth movement (earthquake, landslide) other than sinkhole collapse
  • Volcanic eruption, explosion or effusion
  • Government action - seizure or destruction of property
  • Nuclear hazard - nuclear reaction, radiation or radioactive contamination
  • Power failure - utility service failure
  • War and military action
  • Water - flood, surface water, waves, tides, tidal waves, mudslide, overflow of any body of water, or their spray, whether driven by wind or not. Also excludes backup from sewers or drains, underground water pressing, flowing or seeping through foundations, floors, doors, windows or other surfaces.
  • Pollution
  • Wear & Tear
     

Again, you must read your policy as the exclusions vary from one policy to another.

Property insurance is usually provided on a “replacement cost” basis. As a result, you may be asked to submit an inventory of replacement values for office furniture and fixtures, office equipment, computers and peripherals, laboratory equipment, refrigeration systems, etc.

  • General Liability Insurance: Provides legal liability coverage for bodily injury, property damage, personal injury or advertising injury. Some medical expense coverage is included as well as legal liability for loss caused by a fire emanating from your property. Liability coverage is also provided for automobiles owned by or rented by employees and driven on NPC business. Physical damage coverage for rented cars may be purchased on a separate policy. General liability insurance does not cover medical malpractice claims.
  • Umbrella Insurance: Provides inexpensive increased limits for general liability, auto liability and employers liability.
  • Medical Malpractices Insurance:   Click here fore more information on Federal Tort Claims Act coverage and medical malpractice insurance.
  • Event Cancellation and Interruption Coverage:  NPCs that administer meetings and conferences can incur substantial financial liability when they sign contracts for hotel rooms, meeting space and food and beverage services.  Event cancellation and interruption coverage protects the organization from financial losses caused by fire, destruction of the site, strikes, non-appearance of speakers, adverse weather and power failures.  Any insured occurrence that causes you a partial loss due to reduced attendance, or that forces you to cancel, postpone, curtail, or abandon your meeting is covered.  For information and an application for on comprehensive event coverage for single or multiple meetings, please contact the NAVREF Insurance Program broker.   

NAVREF Insurance Program Broker

Riggs, Counselman, Michaels & Downes, Inc. (RCMD) - merged with JZA in 2007
555 Fairmount Ave
Baltimore, MD  21286
Website: www.rcmd.com

Agent:  Mandy Smith, Client Executive
Email: csmith@rcmd.com
Toll free: 800-346-4075
Direct: 410-512-4618
Fax:  410-583-5459
 

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