Nonprofit Risk Management 

Tip of the Month - April 2008

April showers bring...insurance claims? responding to water damage

Did you know that claims for water damage are among the most frequently filed claims on a business insurance policy? Whether from a leaky roof, damaged water pipes, or an accidentally activated sprinkler system, water in the office is usually a huge mess, as well as a significant business interruption. Prevention is not always possible, especially when the damage is caused by the tenant upstairs whose water cooler burst. However, avoiding irreparable damage even in the face of an unanticipated crisis should be a goal. That’s why backing up computer systems on a regular basis is so important along with keeping CPUs elevated on portable stands. But what’s to be done when you arrive at the office and are greeted by a flood on the floor from a backed-up drain, or water dripping out of the ceiling light fixtures?

• First, make sure the phone number and name of your nonprofit’s property insurance agent is always accessible, along with contact information for a local company that provides clean up and remediation for water damage. Put all that essential contact information in an unlocked “Emergencies” drawer and keep a copy off site in the event your office is inaccessible due to extensive damage.
• Call your insurance agent and line up a remediation company as soon as possible to bring in their high intensity blowers to start drying the area affected by water damage.
• Catch and remove as much dripping/standing water as possible with garbage pails, buckets, mops and sponges.
• Don’t use a regular vacuum to remove water and don’t use any electrical appliances while standing on wet carpeting or a wet floor.
• Unplug computers and electrical equipment and bring to a dry area.
• Try to dry out the office as soon as possible to discourage mold from growing and protect porous materials such as wood from dampness. Open windows if it’s seasonable.
• Put squares of aluminum foil under chair and desk legs between the furniture and wet carpet. Remove all objects from wet walls, and books/objects from shelves and spread them out to dry.
• Open drawers of filing cabinets and closets for faster drying.
• Try to stabilize the internal temperature to around 70 degrees and use a dehumidifier if possible.

Meanwhile, just to be prepared, review what your property insurance policy currently covers. If you arrived at work to a pool of water instead of a freshly-brewed cup of coffee would there be any coverage? Some insurance companies now offer special insurance policies called “sewer and drain back-up coverage” because that type of exposure is often excluded from a regular property insurance policy.

About the Nonprofit Risk Management Center: The Nonprofit Risk Management Center (NRMC) was established in 1990 to provide assistance and resources for community-serving nonprofit organizations. As a nonprofit, the Center is uniquely positioned to both understand and respond to questions with practical, affordable suggestions for controlling risks that threaten a nonprofit’s ability to accomplish its mission.

NRMC's mission is to help nonprofits cope with uncertainty. We offer a wide range of services (from technical assistance to software to training and consulting help) on a vast array of risk management topics (from employment practices to insurance purchasing to internal controls and preventing child abuse). We do not sell insurance or endorse organizations that do. Look to the Nonprofit Risk Management Center’s regional meetings, monthly Webinars, and online Risk Management Classroom for additional training at www.nonprofitrisk.org.

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