Most nonprofit organizations operate on a tight budget, dedicating as much money as possible to serving their target population. This makes sure they provide their advertised services and keeps donors happy, but it also means that any loss, whether an injury, property damage, or a cyber attack, would throw the budget into chaos and possibly force the organization to close. So nonprofits need insurance to protect against common risks, and it’s not as pricey as you might think.
General Liability Insurance
A general liability policy insures your nonprofit organization against claims brought by clients, volunteers, donors, vendors, or other visitors to your offices or participants in events held by your organization. This includes injuries like falls and back strains, damage to a client or visitor’s property that occurred on your premises.
Like all organizations, nonprofits need to insure their property in case of fires, storms, vandalism, theft, and other catastrophic events. Even if you rent your office space, you still have furniture, equipment, supplies, and your computers to protect.
You will want to make sure your policy covers replacement cost for your items, not just its (usually depreciated) market value at the time of the loss. Replacement cost may be a little more expensive, but it would save you a lot of money in the event of a loss. Also, make sure to inquire about any types of losses that might be excluded from your policy, such as flooding, which usually requires a separate policy.
If your staff members or volunteers drive vehicles as part of your operations, even if they use their personal cars, you need a commercial auto policy. This covers any accidents or property damage that could happen when they are driving in service of the nonprofit’s activities, which would not typically be covered under their personal auto policies.
Product Liability Insurance
Many nonprofits sell products to clients, such as an organization that helps people with vision loss selling vision aids, while others sell branded merchandise or consumable items like food for fundraising. Product liability insurance protects you in the event that someone claims your product harmed them in any way and tries to sue.
Directors and Officers Insurance
Directors and officers insurance (frequently called D&O) covers any claims stemming from management decisions made by the board or high-level staff members like the executive director. This covers financial mismanagement and frequently employment-related decisions, including volunteers. This would include discrimination claims, wrongful termination suits, and harassment claims. Board members, even if they are not paid, can be individually named in a suit, so this coverage offers vital protection to them.
Professional Liability Insurance
Similar to D&O coverage, professional liability, or errors and omissions, insurance covers claims related to mistakes made by board members, managers, or employees that result in damages. This can also include things someone forgot to do or communicate that leads to problems. This policy covers all staff and volunteers, not just managers and the board.
If your organization has paid employees, state law requires you to purchase workers compensation insurance. This policy covers medical care and financial losses relating to an employee’s injury on the job.
Cyber Liability Insurance
It’s rare to find an organization these days that doesn’t do business on the internet, which opens you to the possibility of a cyber attack. Many nonprofits have databases full of information about clients and donors that could be a valuable target for a hacker, so you’ll want cyber liability insurance to cover you if that data were to be compromised.
Kamm Insurance Group has a long history of working with nonprofit organizations to get the insurance coverage they need. We’ve helped professional organizations, charter schools, and social service organizations get the insurance coverage they need without breaking their budgets, and would love the opportunity to help yours as well.