Nonprofit Insurance 101: Which Policies to Purchase
Nonprofit organizations operate on a tight budget. Thus, a sudden considerable expense could lead to financial difficulties. To solve this dilemma, these organizations should get nonprofit insurance with the right coverage.
Here are the policies you should evaluate, as these will protect your nonprofit business and your volunteers.
General Liability Insurance
Also known as CGL (commercial general liability), this insurance protects your nonprofit enterprise against litigation due to a visitor or supplier getting injured on your premises.
With a few hundred dollars per year, you can get through such times like this. Your insurance policy will cover the damages and litigation costs. Depending on the premium, your nonprofit organization can get coverage of up to $1M or $2M.
Property Insurance
Your nonprofit business still needs an office, either a rented one or a commercial owned by one of the Directors. Having a physical office means exposure to risks such as fire, vandalism, earthquake, among others.
With insurance, you can save your nonprofit from financial ruin. You can rebuild the office or replace office equipment minimally.
However, you need to understand and know out-of-pocket expenses before you get your insurance. Also, your insurance provider must explain to you what fortuitous events are not covered in the insurance.
Another thing to remember is the use of the home property for nonprofits. Many insurance providers don’t cover nonprofits that conduct their business-related transactions in a home.
If this is the case, make sure you carry alternatives coverage such as a stipulation added to your existing homeowners’ insurance policy.
Auto Insurance
Do you and your volunteers use vehicles when they travel to see clients or locations? Do you use it for nonprofit activities? If yes, auto liability insurance should be part of your insurance benefits.
In some states, you’re required to get the minimum coverage. This policy will cover vehicular accidents and injuries caused by you or your volunteers to other people.
You might also need to get personal protection and underinsured motorist coverage.
Product Liability Insurance
Many nonprofits sell products to raise funds. These products could be baked goods, arts, or recycled products. If your nonprofit does this, you need insurance coverage, such as product liability insurance.
What does this MD Nonprofit Insurance cover? It covers litigation costs for customers suing your nonprofit organization. Despite following health protocols in preparing these products, there could be people who sue you because they claim your product is defective.
A minimal amount should cover your nonprofit against this litigation risk.
Directors and Officers Insurance
Financial mismanagement and fraud are the common lawsuits against nonprofit directors and officers. Often, officers and directors would invest the assets. If these directors lose, creditors could sue your officers, directors, and even volunteers.
Your insurance provider would pay for the court expenses and damage costs with the right level of coverage. Thus, you must know the coverage included in the policy.
When evaluating this policy, keep in mind claims regarding employment concerns. This should be part of the insurance package in case directors fire employees and volunteers without following due process.
Professional Liability Insurance
Malpractice, mismanagement, omissions, and errors are some risks a nonprofit could encounter. Compared to the D&O coverage, this insurance covers work-related claims such as discrimination and harassment.
Litigations can costmore money than paying the minimum premium for insurance. So, it’s cost-effective to invest in the right coverages.
Workers’ Compensation Insurance
This insurance is important if you have employees who operate in your nonprofit organization. It will protect your employees resulting from accidents or injuries while working for your organization.
The benefits include disability claims, a portion of his or her regular salary, medical and hospitalization coverage. You can request complete inclusions and exclusions of this insurance from your service provider.
Mistakes to Avoid
Nonprofits are always working within a limited budget, and they need to use their funds correctly and appropriately. However, don’t use this reason to forego getting insurance coverage. Many nonprofits are getting insurance, but still, they make several mistakes that you should avoid.
- Just remember, one policy is not enough to cover your organization against unprecedented events.
- Insurance premiums are not always expensive. There are flexible policies that suit your budget.
Conclusion
A nonprofit organization needs insurance coverage, even with budget constraints. These constraints should be your organization’s main reason for getting a policy because your organization can’t afford litigation expenses and other unforeseen costs.
About Moody Insurance Worldwide
Moody Insurance Worldwide, a division of Moody & Associates that was founded in 1914, is a leading provider of risk management programs and insurance coverage to individuals and businesses across the East Coast. We write all sizes of businesses, with technical expertise in many key industry areas, and provide personal insurance programs for estates and high net worth individuals. Our licensed, experienced commercial account managers can work with you to determine the coverage that you need at a competitive rate. Contact us today at (855) 868-0170 to learn more about what we can do for you.