Nonprofit organizations are unique in our economy, but they face many of the same insurance needs as any other business organization. These may include general liability, directors and officers (D&O) coverage, workers’ compensation, crime, and property insurance.
If you have employees, then workers’ comp is a must. This type of policy protects a nonprofit if one of its staff members is injured at work or becomes ill due to a job-related incident. It pays for medical expenses and lost wages so that the employee can get back on their feet.
Commercial auto insurance is a must for nonprofits that have vehicles that they use to conduct activities on behalf of the organization. This type of policy covers the cost to repair or replace a vehicle, including any equipment or supplies that are inside it. It also pays for any damage to other people’s property that is caused by a nonprofit-owned vehicle.
A nonprofit’s property insurance is another must-have for any 501c3 organization. This type of policy pays to repair or replace a nonprofit’s property, such as its offices, furniture, machinery, fixtures and inventory, if it is damaged or destroyed. It also provides financial protection in case a nonprofit’s inventory is stolen. This includes computers, furniture and other technology as well.
Most nonprofits rely on donations and grants to fund their operations, but these income streams can be complicated to manage. Because of this, nonprofits must carefully consider all potential sources of monetary loss and determine the appropriate levels of insurance protection for each.
For example, if a nonprofit is holding a fundraiser, they must decide whether or not to buy event insurance. This type of policy covers costs associated with canceling the event if the weather is inclement or if the venue suddenly becomes unavailable. It can also cover other unexpected expenses.
Another area of monetary risk that nonprofits must consider is their ability to be sued. As noted above, negligence claims are often the basis for lawsuits filed against nonprofits. Negligence is defined as failing to do something that an ordinarily prudent person would do under the circumstances or doing something that a reasonably prudent person wouldn’t do.
As mentioned above, D&O coverage protects the managerial team and board of directors of a nonprofit from claims resulting from wrongful accusations or malpractice. Many D&O policies come with a publisher’s liability clause that provides protection against claims such as libel and copyright infringement, which is important for nonprofits that produce newsletters and other publications.
Nonprofits can purchase a package policy that combines all of the above insurance coverages. Usually, this is more cost-effective than purchasing the coverages individually. It’s always best to speak with an independent insurance agent who has experience working with nonprofits. They will understand which coverages are most important and which companies offer the best coverage at the most affordable prices. For additional information, read this article about what type of insurance does a nonprofit organization need