Insurance for Nonprofits

Nonprofit organizations exist to serve the public good, and they often operate with limited budgets. Insurance can help nonprofits mitigate risks and protect themselves against unforeseen events. In this article, we will explore the different types of insurance that nonprofits should consider, how to choose the right insurance, and common questions about nonprofit insurance.

Types of Insurance for Nonprofits

Nonprofits face many of the same risks as for-profit businesses, including property damage, liability, and theft. However, nonprofits also have unique risks, such as the possibility of a volunteer getting injured while performing their duties. Here are some types of insurance that nonprofits should consider:

General Liability Insurance

General Liability Insurance provides protection for a nonprofit against claims of bodily injury, property damage, and personal injury. It covers damages, legal fees, and medical expenses that arise from accidents or injuries that occur on your organization’s property or during events.

Directors and Officers Insurance

Directors and Officers Insurance (D&O) protects the nonprofit’s directors, officers, and trustees from personal liability arising from decisions they make on behalf of the organization. This type of insurance covers lawsuits brought against individual board members and the organization itself, including legal fees and settlements.

Property Insurance

Property Insurance protects a nonprofit’s physical assets such as buildings, equipment, and inventory. This type of insurance covers the cost of repairing or replacing damaged property due to theft, fire, or other covered events.

Worker’s Compensation Insurance

Worker’s Compensation Insurance covers costs related to job-related injuries or illnesses suffered by employees or volunteers. This type of insurance provides wage replacement, medical benefits, and potential benefits for long-term injuries or illnesses.

Choosing the Right Insurance for Your Nonprofit

Choosing the right insurance is a critical decision for nonprofit organizations. Here are some factors to consider when selecting insurance:

Assess Your Risks

Take a comprehensive look at your organization’s operations, events, and activities. Consider risks such as bodily injury, property damage, and liability. This assessment will help you determine the types and amount of coverage you need.

Review Your Current Policies

Evaluate your existing insurance policies and determine if they are enough. Also, consider if your policies have any exclusions or have low limits of coverage.

Get Multiple Quotes

Shop around for insurance policies from different providers to get the best coverage and pricing. Don’t forget to compare the coverage amounts and terms of each quote you receive, so you can make an informed decision.

Work with an Insurance Specialist

An insurance specialist who is familiar with nonprofit organizations can help you navigate the complex world of insurance. They can provide expert advice on the best policies for your organization and help you understand the terms and conditions of the policies.

FAQs about Nonprofit Insurance

What is a certificate of insurance, and why do I need one?

A certificate of insurance is a document that verifies that a nonprofit has insurance coverage. It confirms the types of insurance and the coverage amounts. It’s often required by landlords, vendors, or others doing business with the organization to ensure that they are adequately protected.

Do volunteers need to be covered by insurance?

Yes, volunteers should be covered by insurance. Worker’s Compensation Insurance may cover medical bills and lost wages for volunteers who are injured on the job. Also, general liability insurance protects against claims of bodily injury and property damage for volunteers.

Are fundraising events covered by insurance?

Fundraising events should be covered by insurance. General Liability Insurance covers accidents or injuries that occur during events. Also, if the event has a specific purpose like a walkathon or a race, special-event insurance can provide additional coverage.

Can nonprofits be sued for discrimination?

Yes, nonprofits can be sued for discrimination. Directors and Officers Insurance can provide protection against claims of discrimination or harassment brought against individual board members or the organization itself.

What is umbrella insurance, and do non-profits need it?

Umbrella insurance is an additional layer of liability coverage that goes above and beyond the limits of the underlying policies. Nonprofits may consider getting umbrella insurance to protect themselves against large lawsuits that exceed their current coverage limits.

Conclusion

Nonprofit organizations should take the time to evaluate their risks and purchase the right types of insurance to protect their assets, employees, volunteers, and board members. By having the proper insurance coverage in place, nonprofits can continue to serve the public good without worrying about the risks that come with operating an organization.