What Insurance Coverage Do Nonprofits Need?

An In-Depth Look at NonProfit Insurance Policies and Why They Matter.

We often think of nonprofit organizations and for-profit businesses as two distinct categories that rarely overlap. However, insurance is a common thread. Both nonprofit and for-profit entities need adequate insurance policies, and the policies are often similar. The difference lies in how and what they protect. Let’s dive into what insurance policies nonprofits need and what they cover.

Why Insurance Matters for Nonprofits

Nonprofits are great at aligning their services, events, fundraising, and even messaging to their unique mission that addresses often critical needs. They can also be so unintentionally good at those other things that they forget to plan for their own critical needs, including having adequate insurance coverage. Some types of insurance are required to operate, and a lack of coverage could put you out of compliance. Plus the right coverage ensures nonprofits can continue on their mission without worrying about financial hardships caused by unforeseen events or disruption of services. Not only that, but proper insurance coverage helps employees, volunteers, and donors feel confident in your organization’s stability. 

Insurance Policies for Nonprofits

General Liability

General Liability is a necessity for all businesses and organizations. It covers claims which say your organization caused bodily injury or property damage. A GL Policy is important for organizations that have a lot of foot traffice, have vendor booths, or host off-site events. 

Directors and Officers

Directors and officers, often called D&O, insurance protects your executives, leaders, and board members’ personal assets, along with their spouses. Some executives and board members may require a nonprofit to carry a D&O policy before they work or serve there, especially for larger organizations.

Hired and Non-owned Auto

A hired and non-owned auto policy covers your employees and volunteers’ personal vehicles when they drive them on the clock. It also covers vehicles that your organization rents. 

Workers comp

You’re probably familiar with workers comp policies that provide compensation for employees after an injury on the job. Sometimes workers comp can have a bad reputation, but taking care of your employees and volunteers is important. Whether you’re a tight-knit group or not, a workers comp policy can build trust in your leaders and organization.

Business Property Insurance

A business property policy, sometimes called a Tools and Equipment Policy, is common for contractors and general laborers, but it’s important for nonprofits, too. It protects things like your office equipment and contents, seasonal items in storage, or your donation inventory.

Other Nonprofit Policies to Consider

There are other policies that you might want to consider for your nonprofit including cyber liability insurance, special event insurance, and professional liability.

Cyber Liability

Cyber liability will protect your nonprofit from things like data breaches and scams, which can be very important if you have sensitive information in your donor database or client list. 

Event Insurance

Event Insurance is helpful for organizations that frequently host large events, either as part of their service or fundraising efforts. It covers risks associated with hosting events, including cancellation, liability, and property damage.

Professional Liability Insurance

Professional Liability is also known as errors and omissions insurance. It covers claims arising from professional advice or services provided by the nonprofit.

Picking the Right Coverage for your Nonprofit

As with any business expense, you have to weigh the risks and benefits of carrying a new insurance policy. While you don’t get a choice to have some mandatory policies, you always have a choice on who you partner with to make sure your organization is properly covered. I will work with you to identify the specific risks and requirements for your organization, answer any questions you may have, and tailor coverage for your needs and budget. 

Every decision you make impacts your organization’s ability to serve and support your community and champion your cause. Securing comprehensive insurance coverage is a crucial step in safeguarding your organization and ensuring a stable future. 

Ready to be confident in your organization’s coverage? Let’s schedule a 15-minute review of your current policy. 

Have additional questions? Call us at 503-912-8839 or email me at mspivey@orrandassociates.com