Posted on May 17, 2014
Nonprofit organizations have unique needs when it comes to business insurance. The nonprofit role to provide volunteer services to the needy, for sports or mentorship requires sufficient protection to manage risk. There are some federal and state laws in place to protect nonprofits, but adequate business coverage is still needed.
While each non-profit company will want specialized coverage for their particular industry, most nonprofit organizations have coverages common to their situation no matter what the service they provide: general liability, property and commercial auto as well as directors & officer?s liability.
General Liability for Nonprofit Organizations
General liability is a must for every business including nonprofit ones. This important coverage provides defense for damage to other people?s property, bodily, advertising and personal injuries. If a nonprofit experiences a frivolous lawsuit, it is possible to financially destroy that company. Having this protection ensures that legal expenses, medical costs and other fees are fully paid thus shielding the nonprofit from out of pocket expenditures. Because many nonprofit operations involve using other facilities such as baseball fields, conference room rentals and office space, general liability insurance is definitely needed.
Commercial Property Insurance
Commercial property insurance provides protection for physical buildings and structures as well as personal property within them such as computers, equipment and business documents. Nonprofits sometimes need specialized insurance within the property insurance category in order to fully protect their property. For nonprofit sports organizations that do not have a physical building, business property coverage will protect sport equipment, laptops and other property used for operations. Insurance professionals can assist non-profits with understanding the necessary property coverage for their particular organizational needs.
Commercial Auto Coverage
Nonprofit companies usually have volunteers who use their own vehicles while volunteering. Board members and other directors may rent autos while fulfilling their duties. Should a claim be made against the company for accidents caused from rental cars or volunteers driving their own, commercial auto insurance can be purchased to cover those events. Commercial auto coverage will protect both vehicles owned by the nonprofit as well as volunteer autos. It is important for volunteers to understand that their personal car insurance will not typically cover them while they are performing work on behalf of the nonprofit organization. Additionally, nonprofits need coverage for passengers being transported as well. So for instance, if a sports team is being transported to a game and an accident occurs, the commercial auto coverage will pay for injuries and damage up to the policy limits. The same would apply for a nonprofit senior facility bringing a patient on doctor?s visits.
Directors and Officer?s Insurance
Director and officer coverage is one of the most important types of protections that nonprofit organizations can acquire. This insurance protects management teams, directors, board members or officers from claims that they made wrong decisions or acted improperly. While many believe there is a level of immunity from lawsuits for nonprofit executives, the truth is that employees, clients or other third parties can file lawsuits against individual members of nonprofit management teams. Typical examples of covered issues for directors and officers are sexual harassment, discrimination, defamation, emotional distress or wrongful termination.
The best way to determine which coverage and policy amounts are best for your nonprofit organization is to discuss your situation with a professional insurance broker. Brokers are able to assist with evaluating a company?s risks and then making appropriate recommendations for insurance protection.