Choosing insurance for your nonprofit organization can seem like a daunting task. There are many things you need to consider when choosing the right insurance products to safeguard your organization against liability, such as number of employees, geographical location, and whether you work with volunteers. An accident can happen any time, and it can cost your business thousands if you do not have comprehensive nonprofit insurance protection. Read on for five tips for choosing insurance products for your nonprofit organization.
Despite good intentions, nonprofit organizations are certainly not immune to lawsuits and claims associated with business activities. Nonprofit insurance products safeguard organizations against responsibility for potentially hundreds of millions of dollars, and if there is not enough coverage, they could have to pay out of their personal assets, depending on the suit.
Companies that operate out of an office space, visit client homes, conduct off-site business, or work with volunteers or vendors should have comprehensive insurance coverage. Nonprofit insurance provides protection against claims associated with the following:There are many types of insurance that are important for nonprofits to have. Businesses must protect themselves against industry-specific hazards as well as common risks, such as bodily injury due to an accident. For example, a nonprofit legal center may have different insurance needs than a nonprofit food pantry. Before choosing, it is best to work with an underwriter to identify the right nonprofit insurance products for your specific needs. The following are some examples of common coverages for nonprofits:
General liability – All kinds of nonprofits should have general liability insurance. It provides coverage against claims made by third parties for bodily injury and damage that occurs during daily operations. A general liability policy ensures your organization against the following:
General liability may also include medical expense that provides a low limit for “no-fault” injury. This comes in handy because it doesn’t require a finding of negligence. General liability insurance does not cover employees, so it should be couples with workers’ compensation coverage.
Errors and Omissions – Errors and omissions policies, also referred to as professional liability coverage, generally focus on negligence. Everyone makes mistakes, and all businesses can expect some level of human error. With errors and omissions coverage, your company will not be left on the hook for a mistake made by a volunteer, employee, or manager. Errors and omissions coverage is especially recommended for organizations that offer coaching, counseling, mentoring, educational services, therapy, or case management.
Special Events – Coverage for special events generally protects against risks associated with meetings, conventions, and other similar events. Companies that participate in or sponsor events often should invest in this coverage. Event insurance can cover your costs if you unexpectedly need to cancel an event or an accident happens at the event that causes damage or bodily injury.
Property Damage – Insurance that safeguards against physical damage to an office space or employee property is crucial. Property damage can happen any time and be extremely costly, so it is important for nonprofit organizations to be covered. Property damage insurance covers company property, such as fixtures, office equipment, and furniture. A nonprofit that uses a lot of computers or other electronic equipment should certainly invest in property damage insurance. Common covered office property includes:
Workers’ Compensation – Workers’ Compensation coverage provides protection for employees who are injured on the job. It is mandatory in almost every state and covers medical expenses and wages for non-profit employees who are unable to work due to their injuries. Workers’ Compensation accounts for medical expenses, disability, and death benefits for injured workers. Volunteer Accident coverage pays for minor injuries for volunteers who are donating their time, so it is absolutely vital for nonprofit companies. Volunteer injuries can be addressed by a standard general liability policy, unless there is an additional volunteer exclusion.
Like all insurance, nonprofit coverage is meant to protect your company’s existing assets. Umbrella insurance coverage provides increased coverage limits. Non-profit assets can be liquid (cash and short-term receivables) or fixed (furniture, inventory, equipment, land, fixtures, buildings). If you have a large number of these assets, or the assets you have are particularly high-value, you will want to secure coverage that prioritizes those assets.
In selecting insurance, you’ll need to examine the risks commonly posed to your non-profit organization. Think about all your regular activities and the groups of people with whom your business interacts. Then, think about all the potential problems that could arise. This should give you a pretty good idea of the most pressing issues that need to be addressed by insurance coverage.
Insurance risk can be categorized as follows:
Individual hazards:
Activities/events risk:
Like any business, nonprofit owners are likely to want to scale as they grow. Scaling is facilitated by good business practices. Liability for an accident or property damage can cause major problems for a growing non-profit and set the business back exponentially. The last thing a business that is trying to scale needs is a lawsuit that can result in massive amounts of fees and damages. For example, a sexual misconduct lawsuit can cost a company a fortune in legal fees and hinder company growth for years. Fortunately, it is easy to outfit your nonprofit against issues that could prevent scaling by choosing the proper insurance products.
Once you’ve decided to purchase nonprofit insurance, you’ll need to develop an initial budget with an underwriter. Often, the cost of coverage depends upon industry risks and company size. Policy limits determine how much your insurance provider will pay on covered claims. Per-occurrence limits are the maximum your insurer will pay for a single incident, while an aggregate limit is the maximum they will pay on claims during your policy period, which is typically one year. Higher limits cost a bit more and provide more comprehensive coverage. Larger nonprofits may choose to invest in high-limit insurance in order to mitigate risk, while smaller companies with fewer industry risks may choose lower limits.
If you are looking for insurance for your nonprofit organization, call 888-9OSPREY (888-967-7739) or get a free online quote today. OspreyWatch, powered by Osprey Underwriters will help you select the best, most comprehensive insurance products to protect your nonprofit and afford you peace of mind.