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Shelters Feel Effects of Insurance Industry Troubles

Shelter managers can weather the market by educating themselves about coverage and potential liabilities

Shelter managers can weather the market by educating themselves about coverage and potential liabilities

© Carrie Allan
It sounds like a riddle: When does an adoption mean no more adoptions? But the answer is far from amusing: One unsuccessful adoption can virtually destroy a shelter if it results in a bite that results in a lawsuit that results in a nervous insurance company refusing to renew the organization’s liability coverage.

For Kathy Schlintz, president and founder of PAL Humane Society in Victorville, California, being dropped by her carrier was the beginning of a two-month nightmare; her shelter was forced to close its doors temporarily and cease most of its services after placing a dog who later bit a child. “The dog was a little dog-aggressive, and we informed her adopters of that,” says Schlintz, “but her [relinquishers] had told us she was good with kids and we never saw a problem with her while she was in the shelter.” The organization had even evaluated the dog for temperament and behavior problems prior to adoption.

But in that doggedly unpredictable way that canines have, the retriever-rottweiler mix ended up biting the family’s two-year-old, and the family brought the dog back to the shelter, where she was euthanized. Schlintz and her staff, who were appalled that the dog had bitten, thought the return of the animal marked the end of a terrible situation—until three months later, when they received notice that the family was suing, claiming the shelter had placed the dog knowing she was a danger. The shelter’s insurance coverage was almost up for renewal, and the company dropped the humane society, leaving Schlintz to scramble for options.

The details of her experience may be unique, but her frustration isn’t: For the past year, The HSUS has been getting more than the usual number of calls from shelters that have had their insurance rates skyrocket, or, like PAL, have had their carriers refuse to renew coverage.

Insurance coverage has long been a challenge for shelters, where anything can—and frequently does—happen. For the past few years, Steve Putnam, HSUS vice president of business development and corporate relations, has been searching high and low for an insurance company willing to offer group discount rates to animal protection organizations that are members of The HSUS’s Shelter Partners program—but has so far come up empty-handed. “Everyone’s rates are going up,” says Putnam. “For ten years insurance rates were dropping, and then after the World Trade Center [attacks] they shot up again.”

It’s more than 9/11: Rising medical costs, highly volatile financial markets, and other inflationary pressures were already taking their toll before September 2001, and the combination has sent the industry into a free-fall that has included mass layoffs for some companies and bankruptcy for others.

It may be tough to conjure up sympathy for an industry that most people love to hate, especially if you’re someone who’s had to spend endless hours haggling over policy minutia or who’s counseled relinquishers unfairly targeted by breed-specific homeowner’s policies. But trouble in the insurance industry means trouble for everyone. Premiums are getting pricier, coverage is getting harder to find, and companies are less willing to take risks—especially on organizations as rife with potential risks as animal shelters.

After Schlintz embarked on a quest to find new insurance—and received sky-high rates from some companies and flat-out refusals from others that didn’t want to be involved with the pending bite case—she was finally put in touch with the Nonprofit Insurance Alliance of California. “We’ve ended up with better insurance than we had before, that covers areas we didn’t know were vulnerable, and at a cost about a quarter of what some other companies were quoting,” says Schlintz.

PAL did the right research, but finding the right insurance took an enormous amount of time and caused an enormous amount of stress. With any luck, The HSUS’s goal of finding group rates for its Shelter Partners will come to fruition; Putnam is still hopeful that changes in the market will make it possible. He’s not giving up, and neither should others who’ve come slamming up against the new market realities. In the meantime, organizations can take certain steps to make themselves more appealing to insurers, and a little research (with help from the tips provided in the sidebar) may help find the way to a new (or better) policy.

Getting out of the Frying Pan—Without Getting into the Fire

If you’ve been refused renewal or if your premiums have risen because of claims against your organization, take these misfortunes as hard-gotten advice and institute policies and procedures to address them. For example, if shelter staff have been bitten too often, you can develop better safety procedures that may get you back on an insurer’s good side.

In fact, the best thing any organization can do to get a better deal on insurance is to continually examine policies and physical facilities for potential liability issues. As Schlintz and many other shelter employees have discovered, behavior evaluations are not foolproof, particularly when it comes to dogs. Sometimes even when tests and observations indicate aggressive tendencies in an animal, staff find it difficult to make the decision to euthanize, often hoping the behaviors are only a result of stress or anxiety and will work themselves out in the environment of a loving home. But choosing not to place one animal may be the decision that keeps an agency open and makes it ultimately able to place hundreds of others; in one recent case, an organization that did not err on the side of caution actually had to close its doors permanently following a dog bite case and a subsequent drop in coverage.

Addressing facility hazards will seem like a cakewalk by comparison; you probably already know where most of them are—and if you’re having regular nightmares about that particularly slippery floor or the ancient padlock securing your euthanasia drug locker, you know what needs to be done. But you can also get help spotting these issues; have a director from another shelter come in and give your place a once-over for possible concerns, then offer to return the favor. Ask a group of staffers and volunteers to keep an eye out for problems like slippery or uneven floors or anything that has “I’m going to poke someone’s eye out one day” written all over it. Make sure safety is a visible priority—everyone in the shelter should know the locations of eyewash stations and first aid supplies, and you should have an up-to-date evacuation and emergency plan for your facility. Develop operations policies and procedures in writing; these can help to show your insurer that you take safety seriously.

Getting through a tough insurance market is difficult for most companies, but nonprofits can be hit especially hard. If you’ve had problems—or better, if you’ve successfully negotiated good coverage terms or found an insurance company you like working with, The HSUS would like to hear from you. We are monitoring the ongoing developments in the industry and looking for the light at the end of the tunnel. If you see it first, pass the binoculars—call us at 202-452-1100 or e-mail

For more information, check out the Nonprofit Risk Management Center’s website (, where you’ll find several excellent articles on making your nonprofit more appealing to insurers.


Here are some tips on making sure your insurance will always be a warm blanket

$ Do your homework. Know your coverage and know what you need to be covered for. Does your insurance cover volunteers? Read your policy through and get anything that confuses you clarified by someone who understands the business and can explain it in layman’s terms.

$ Know your claims history. If your organization has gone for years without a claim, that’s a great fact to pass on to a potential insurer. Be prepared to make the case that your organization is a safe investment.

$ Save for a rainy day. It’s drizzling now, but the weather report indicates it’s going to get worse before it gets better. The insurance market shows no signs of softening, and organizations should plan to pay substantially more to renew their coverage. Plan now, and if the price doesn’t go up as much as you’ve budgeted for, you can be happily disappointed—and use the money on your great programs.

$ Watch the deadlines. Don’t allow your coverage to lapse, and be aware of your state’s laws regarding when insurers must notify clients of their intent not to renew. According to a recent article by Melanie Herman, executive director of the Nonprofit Risk Management Center, the leeway time varies by state, but if your organization is dropped without sufficient notice, your carrier may be legally required to continue its coverage.

$ Talk to other organizations. Other shelters in your area may have a history with a particular company or agent and may be more than willing to share their luck with you. State humane federations and animal control associations can also be great resources; a list of these organizations can be found in the Resource Library under "State Animal Control Associations and Humane Federations" and in your copy of Shelter Pages. Knowledge is power, and the more shelters share it, the better their bargaining positions.

$ Develop a relationship. Find an insurer who understands the challenges your organization faces and is sympathetic to them. Seek out insurers that specialize in nonprofits. You should also keep an eye on how your insurer is doing financially—if the company that insures you falls upon hard times, your chances of filing a hassle-free claim drop through the floor.

$ When all else fails, raise your deductible. Try increasing the amount your organization pays out of pocket before your insurance company covers anything. If you’ve got a good safety record and feel comfortable that claims aren’t likely, then raising your deductible might help your insurer decide that it’s worth the risk to cover you.


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