We just formed a 501(c)(4) federal super PAC. What kind of insurance should we have? Our local agency won't quote a policy since we are not a 501(c)(3).
My immediate response would be it's time for you to look for a new broker. It's an interesting question and I thought I should get an opinion from a real expert in insurance matters, Melanie Lockwood Herman, Executive Director of the Nonprofit Risk Management Center. Melanie weighs in:
It's DEFINITELY time to find a new broker! 501(c)(4)s can and do purchase insurance, but the agent this nonprofit is working with has a practice limited to 501(c)(3)s. Years ago I wrote an article inspired by the "Here's Your Sign" humor of comedian Bill Engvall.
One of my "signs" was: "According to our agent, insurance companies aren't interested in insuring nonprofits." A variation on that theme is the response received by this nonprofit.
When we receive calls from nonprofits asking for agent/broker referrals, we often recommend that they ask colleagues at similar or peer organizations if they would recommend their broker. In the process of forming the 501(c)(4) the team may have reached out to other 501(c)(4)s, researched the structure of other 501(c()4)s, or interacted in other ways. I would suggest they call these organizations to ask:
1. Who is your agent/broker for property & casualty insurance?
2. Are you happy with the service and responsiveness of your agent/broker? Would you recommend them?
3. Did you experience any specific challenges purchasing liability insurance because of your 501(c)(4) status, mission or anything else?
When interviewing a prospective broker for your nonprofit, ask:
- Do you serve any other nonprofits similar in size, scope and structure to ours? Who? May I contact them to request a reference?
- Which markets do you regularly work with? Is there a market where you place most of your accounts? If so, which market and why? (Keep in mind that a broker who places all of their nonprofit accounts with a single market will not be able to provide credible, competitive bids from multiple carriers!)
- Do you anticipate any challenges obtaining bids for our organization? If so, how will you overcome those challenges?
- Which coverages and limits do you recommend for us at this time?