Nonprofits are a special type of business that operates solely for the betterment of others. However, like all businesses, they can be susceptible to monetary loss. To mitigate risk, nonprofits should have certain types of insurance coverage. To determine what kind of insurance a nonprofit organization needs, it is important to familiarize yourself with the different types of policies available for nonprofits. This will allow you to make an informed decision when choosing a policy.
General liability insurance is a common and necessary form of insurance for nonprofits. This type of insurance protects against most claims alleging bodily injury and property damage. Specifically, it covers injuries caused by an accident that takes place on your property as well as some instances of advertising injury and product liability.
If your nonprofit is looking to purchase this type of insurance, you should look for a provider with experience working with nonprofits. Also, you should inquire about the amount of coverage included in the premium as well as deductibles and other policy options.
Property insurance is a type of coverage that offers protection for the space your nonprofit occupies as well as some of the property inside it, such as fixtures, furniture, office equipment, and inventory. This type of insurance typically offers coverage against property damage or theft due to fire, storms, vandalism, and other accidents. Having this type of coverage is especially beneficial if your nonprofit rents out part of its space or uses third-party locations for programs.
Directors and officers insurance (D&O) is a type of management liability coverage that offers protection for your nonprofit’s executive team and managers from allegations of wrongful acts. These types of accusations can include neglect of fiduciary commitments, sexual harassment, and discrimination. D&O insurance is also often accompanied by employment practice insurance which offers protection to your organization in case of employment-related claims.
Professional liability insurance, or errors and omissions insurance, is another common form of insurance for nonprofits. This type can protect your nonprofit from negligence and malpractice claims brought by employees, volunteers, or clients of the firm. Professional liability policies usually offer a broader range of coverage than D&O and can cover things like advice, services, or recommendations that were provided to customers.
Lastly, if your nonprofit operates vehicles, it’s best to obtain commercial auto insurance. This type of policy is usually offered in a bundle with the other main policies and provides liability protection in case an employee or volunteer drives a vehicle while on the job. Other policies that may be useful for your nonprofit include workers’ compensation, event cancellation, and cyber liability. It’s also a good idea to purchase crime insurance which offers protection against theft by staff and volunteers. This is especially helpful if your nonprofit works closely with vulnerable or underserved populations such as youth, seniors, or the homeless. It’s also important to consider the impact of a data breach on your organization which can be mitigated with cyber liability insurance. what type of insurance does a nonprofit organization need