Given the shoestring budget on which many nonprofits operate, a single large and unexpected expense could lead to financial ruin. So, getting the right insurance to guard against the biggest (or baddest) risks is a wise move for nonprofits (and other businesses).
General Liability Coverage
A general liability policy insures your nonprofit organization against classic slip-and-fall scenarios. (It’s sometimes also called a “commercial general liability” or “CGL” policy.)
Your nonprofit will be covered for damages that it’s ordered to pay to someone (such as a visitor, customer, supplier, or associate) who is injured on the organization’s property.
Product liability Coverage
If your nonprofit sells products to the public — for example, you raise funds by selling baked goods, or your artist-clients create and sell sculptures out of recycled products, consider buying product liability insurance.
It will protect your organization from lawsuits by customers claiming they were hurt by an unsafe or defective product you provided. For example, if a customer breaks a tooth on a walnut shell baked into your cookie or slices a hand on a sharp-edged sculpture, this insurance will cover the legal defence and a sizable portion of the damages.
Property coverage Coverage
Whether you own or rent the space your nonprofit occupies, consider what your organization might lose in the event of a fire, earthquake, vandalism, storm, or similar event.
Buy property insurance that covers those risks, making sure it covers not only the building (if your organization owns it) but any Fixtures, equipment, machinery, office furniture, computers and accessories.
Directors & Officers liability Coverage
Your non-profit’s board of directors and officers (many of whom are volunteers) could be personally named in a lawsuit against your nonprofit alleging fraud or financial mismanagement.
You’d want directors and officers (D&O) insurance to cover the cost of defending the directors and officers and pay any resulting money damages.
Professional liability Coverage
Similar to D&O coverage, professional liability coverage (also sometimes called “errors and omissions” or “malpractice” insurance) protect against liabilities resulting from mismanagement of the organization, as well as workplace-related claims such as discrimination or sexual harassment.
It can help cover not only directors and officers but also staff, volunteers, and the nonprofit organization itself.
Workers’ Compensation insurance Coverage
General liability will not provide coverage for injuries to employees. These coverages are important because they address injuries to your human assets – your employees and your volunteer workforce.
Workers’ compensation pays medical expenses, disability, and death benefits for injured workers. Volunteer accident insurance pays for minor injuries to volunteers who are donating their time and expertise to your cause
Nonprofit organizations and their leaders juggle enormous and varied responsibilities each day – from managing tight budgets to engaging volunteers and donors to fulfilling the organization’s mission. Since so many nonprofits are singularly focused on a particular cause, organizations often neglect to identify and protect against risks that could leave the organization and its board members and officers exposed.
Just as any business or organization have risks associated with employees, board members, data or fraud nonprofit organizations of all sizes are not immune. Claims and threats of litigation can be from vendors, donors, competitors, employees and even government regulators. In fact nonprofit organizations file twice as many D&O claims than public and private companies*, 85% of claims filed are employment related* and every nonprofit organization is at risk of a data breach as they keep and maintain donor financial files, employee records, client data, and even volunteer data.
Nonprofit organizations are mostly like any other organizations, with one major difference: They don’t turn a profit. This type of organization has been granted tax-exempt status by the IRS, which requires them to have a unique form of coverage. The following are common examples of nonprofit organizations that require special coverage:
This is not an inclusive list of non-profit organizations.
The type of insurance required by a nonprofit will depend on the individual organization. A nonprofit organization may need the following coverage:
Our team can help you understand the unique risks and needs of your nonprofit organizations and help find the right combination of coverage your non-profit may need.
The following factors can affect the cost of nonprofit insurance:
We can help you review your nonprofit insurance policy to answer any remaining questions about your coverage. We’ll also be able to help you figure out whether you’ve got enough coverage, or if you should purchase more.
Contact us today for a quote for nonprofit insurance or to learn more.
It might be time to switch insurers whenever the service that your existing insurer provides doesn’t meet your needs. For example, if you have a poor claims experience or an unexplained rate increase, it might be time to consider other options
If you cancel a previous policy before a new policy is effective, you could run into some serious financial problems.
Contact us today to help you with multiple options to choose from.