Nonprofit Insurance – What types do you need to consider?
Amber Deal • May 6, 2021
A nonprofit is a business like no other – its objective is not to turn a profit. They reinvest back into their mission and their community. Profit or not, nonprofits are corporations and should, administratively, be run as such. As a corporation, it’s important to have insurance coverage that protects the mission of the organization and the programming it provides. Consider working with an experienced insurance agent to walk through which coverage is appropriate for you – below is a list of coverage items to become familiar with before your meeting.
- Directors and Officers (D&O) / Employment Practices Liability Insurance – you’re probably most familiar with D&O insurance for corporations, but it’s just as vital for nonprofits. It’s important to protect your board members, especially given that they volunteer their time, efforts, and often their wealth on behalf of your nonprofit. This insurance covers wrongful acts of leadership and neglect of financial obligations. Each policy defines these terms differently, so understand exactly what your policy covers. The Employment Practices piece covers items such as EEOC claims, sexual misconduct, and discrimination practices.
- General Liability Insurance
– General liability covers bodily injury and property damages. Most insurance companies bundle general, professional, and abuse/molestation liability into a proposal. Below are descriptions of each so that you can be prepared to talk about them.
- General Liability covers defense for advertising injury claims like copyright infringement. This coverage is also important if you want to rent space for events, get funding, hold an event, etc. General liability will not provide coverage for any injuries that employees incur – that is covered by workers’ compensation insurance. On many nonprofit policies, general liability will not provide coverage for volunteer injuries. Coverage for your volunteers can often be covered by an accident policy.
- Medical Payments provides coverage if someone is hurt without regard to your liability.
- Professional Liability covers your organization for services such as mentoring, counseling, case management, medical services, etc. This coverage can cover employees and contractors, so long as they are properly disclosed on your application.
- Abuse/Molestation Liability can provide defense, if needed, from lawsuits that involve abuse and molestation incidents. This covers claims directed at staff, contractors, or volunteers for the organization. If your organization serves youth, seniors, disabled individuals, or otherwise are charged with helping a disadvantaged population, you should consider this coverage, especially because these claims are usually explicitly excluded from general and professional liability policies. [1]
- Workers Compensation or Accident Insurance – Workers Compensation coverage will pay medical expenses, disability, lost wages, and death benefits for injured workers. There is also volunteer accident insurance to help cover minor injuries to volunteers who are helping your organization. Understand that volunteer injuries are often not addressed by your general liability policy (there’s often a volunteer exclusion). However, if volunteers are covered under your general liability policy, a volunteer accident policy can help protect your general liability claims experience by picking up minor volunteer mishaps. Speak with an experienced agent to understand your policy coverage.
- Property Insurance – while many nonprofits don’t have much in the way of business property, there is still the chance to have burst pipes, fire, and other environmental damage and theft incurred. These may affect your electronic equipment, office furniture, and other property you have in your workspace. Further, if you own your office space, you likely want to cover your building.
- Auto Insurance – even if your nonprofit doesn’t own a dedicated automobile, you should consider a hired/non-owned auto policy, which will provide some coverage if anyone uses a vehicle for an event, errands, or transporting clients on behalf of the organization. A hired liability policy will provide coverage if the organization needs to rent a vehicle.
- Employee Dishonesty – also known as crime coverage or crime bonds, this coverage helps replace money stolen by employees. If your organization receives municipal or foundation grants, this type of coverage is sometimes required.
- Cyber Liability – this is a new topic that gets a lot of coverage in the commercial world but is also necessary in the nonprofit world to help keep donor, employee, and client information confidential. 60% of small businesses never recover from a cyber attack [2] – the costs can be too much for a business to absorb, making it crucial for nonprofits to maintain appropriate liability coverage for their organization. For additional information on Cyber Liability and how we can help, click here.
If you’re part of a nonprofit in Metro-Atlanta or Middle Georgia, reach out to one of our agents to start the conversation on the type of insurance coverage you need to protect your organization.
Are you interested in learning more about nonprofit insurance ? Contact local insurance agent Sandi Purinton with The Insurance Connection.
Disclaimer: This material is for information only. This post does not provide legal or professional advice. Consult with your own attorney or other expert consultants for a professional opinion specific to your situation. The Insurance Connection welcomes all applications without regard to religion, race, color, national origin, sex, handicap, or familial status.
[1] https://www.thebalancesmb.com/insurance-nonprofits-should-consider-2502320
[2] https://www.nten.org/article/insurance-and-liability/
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