Common Insurance Coverage Options for Nonprofits

Working with a nonprofit charitable organization can provide you with fulfillment as you work for a common cause that directly impacts lives in your local community or the world. Whether you are a volunteer, fundraiser, part of the organization’s staff and management or board of directors, your service can truly change lives and outcomes.

Being involved with a nonprofit can also bring with it certain risks and liabilities that are no different than those faced by for-profit corporations. These risks and liabilities, if not properly managed through the use of certain insurance coverages (which include but are not limited to volunteer accident insurance and other nonprofit insurance coverage), can affect the nonprofit organization’s reputation and bottom line.

Nonprofit organizations provide a valuable service to the community. In order to ensure that this service can be sustained and protected, here are some of the most common insurance coverages you should consider for the nonprofit organization that you are involved with. This information is being presented in very general and broad terms as they may apply to the type of nonprofit organization that you are involved with; you should seek the advice and counsel of a licensed insurance professional that may be able to provide you with insurance coverage options that are appropriate for your nonprofit.

Liability (General v. Professional)

General business liability insurance and professional liability coverage are two of the basic forms of risk management tool that every organization should have in place. These types of common insurance coverage help protect your organization’s assets from claims that may arise from personal injury, property damage or the risk of loss that may be associated with the actions of the members of your staff or board.

Usually sold as Commercial General Liability or CGL coverage, this type of insurance has been in existence for nearly 30 years, provided organizations with essential protection for loss that may occur on site (at the nonprofit’s offices), through advertising or promotion of the nonprofit or any products offered to the public. Professional liability insurance coverage can include a wide array of risk management tools including errors & omissions insurance (E&O), directors & officers insurance (D&O), and employment practices liability insurance (EPLI). These forms are specific to risks to your bottom line that involve actions by the staff of your nonprofit, the members of the board of directors or your employment practices (discussed further below).

Employment Practices Liability Insurance (EPLI)

Employment practices liability insurance or EPLI is designed to protect you from financial loss that is related to your nonprofit’s employment practices. The potential for loss within your organization may be caused by lawsuits or claims made against you by a prospective, current or former employee who feels that you engaged in a harmful action (tort) against them. This harm could be the result of your failure to offer an employment contract or promote an individual, sexual harassment, conduct deemed discriminatory, negligence, and emotional distress or harm inflicted on the employee. Without EPLI coverage in place, your nonprofit could be subject to significant financial exposure should any of these issues give rise to a lawsuit being filed against you and the litigant being successful in their claim.

Property & Equipment

Your property and equipment represent a significant capital asset to your nonprofit organization and its success. Consider the cost of replacing a telephone or computer system deemed critical to your organization’s fundraising efforts and you will come to find that some type of property and equipment insurance protection is needed. Whether you have a standard business owners policy (BOP) or another type of property & casualty coverage for the nonprofit, you may also need to consider equipment breakdown insurance to cover the cost associated with repairing or replacing damaged equipment, while your BOP coverage works to protect the damage to your premises. A complete and thorough review of you current insurance coverages should give you insight as to whether your organization is protected from any catastrophic financial loss that could occur your equipment or property were to be damaged.

Volunteer Accident

Volunteer support is the lifeblood of any nonprofit. Volunteers can assist you with some of the regular and ongoing tasks associated with operating the organization, including special events, fundraisers and community awareness campaigns. Regardless of the size of your organization, volunteer accident insurance should be in place to protect you financially in the event that your volunteers become involved in an accident while performing duties on behalf of the nonprofit.

At Allied Insurance, our team of Pittsburgh insurance brokers make it their job to understand the nonprofit industry to provide real solutions to your organization. For over 15 years, Allied has focused on providing a variety of nonprofit organizations with specialty coverage extensions to minimize their risks and exposure. Contact the Allied team today and discover how they can help you improve your organization’s bottom line.

*Allied does not deem this blog entry as a complete and thorough listing or overview of the above topic, and does not recommend it be primarily relied on. It only highlights some common issues and resolutions. For a thorough overview, please contact Allied’s Risk Engineering Division.