Insurance is taken for granted until something happens where it is needed. This is true for individuals, traditional businesses and nonprofit organizations. There are several different types of nonprofit insurance coverage, all of which play an important role in guarding against an unexpected event that could imperil the group’s future.
General Liability Insurance
General liability insurance protects an organization against accidents occurring to a visitor or client while on the nonprofit’s property. This insurance will cover any damages a court may order the group to pay a victim but does not apply to the group’s employees, who are covered under worker’s compensation insurance.
Whether owning or renting an office or building, nonprofits need to be insured against loss of property and equipment in the event of a fire, natural disaster or other event. If the organization owns the building, the coverage should include it as well as office furniture, computers and other office equipment, inventory and supplies. If flood insurance is needed, it may need to be purchased separately. The amount of coverage should consist of the amount needed to replace items, not their market value at the time of the incident. This type of coverage is also known as equipment insurance.
Another type of nonprofit insurance coverage is auto insurance for employees. If the group’s workers or volunteers use their vehicles or company vehicles for company business, a minimum amount of liability coverage is required. This coverage pays for damages a driver causes to property or other people while conducting the organization’s business.
Directors and Officers Insurance
D&O insurance covers the organization’s directors and any officers that could be named in a lawsuit. Most of the time, these lawsuits are for fraud or mismanagement of funds. However, there are certain kinds of claims not covered by this policy, such as criminal behavior or disputes between individual directors.
Professional Liability Insurance
Similar to medical malpractice insurance, this coverage falls in line with directors and officers insurance. It protects not only against organizational mismanagement but also against such workplace-related issues as sexual harassment and discrimination. The organization itself as well as staff, volunteers, directors and officers are covered under this insurance.
Worker’s Compensation Insurance
This coverage protects an organization if an employee or volunteer is injured while on the job or becomes ill as a result of the job. It provides compensation for medical care and replaces lost income for the worker, and may offer financial benefits to surviving members of a worker’s family if death occurred on the job. The insurance generally prevents the organization from being sued by the employee or their survivors.
For more information on the types of insurance nonprofits should have as well as individualized insurance plans, contact Allied Insurance Brokers for a free evaluation.
*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.