Nonprofit organizations operate differently than for-profit businesses; therefore, they have different risks and insurance needs. While all organizations should have General Liability Insurance (often referred to as “slip and fall insurance”), the amounts and types of insurance needed beyond that depends on the work being done, services provided, or people involved.
Nonprofit organizations typically operate on a tight budget, so insuring against expensive losses is vital. The list below details what types of policies may be needed for nonprofits, and what they protect against:
EMPLOYMENT PRACTICES LIABILITY (EPLI): covers Equal Employment Opportunity Commission (EEOC) or sexual harassment claims (this coverage can sometimes be coupled with D&O coverage under one policy)
DIRECTORS & OFFICERS (D&O): provides protection for the personal assets of board members and leaders of the nonprofit organization against any lawsuits filed due to wrongful decision-making
ERRORS & OMISSIONS (E&O): protects the organization by providing professional liability coverage against inadequate or negligent work by employees
GENERAL LIABILITY (GL): “Slip and fall insurance”; covers bodily injury or property damage, as well as defense costs for personal injury or advertising injury claims, such as copyright infringement
WORKERS COMPENSATION: covers medical expenses, disability, or death benefits for injured employees. Volunteers that suffer bodily injury can also be covered under work comp
PROPERTY: provides protection for any buildings/office space owned by the nonprofit. If the nonprofit rents office space, coverage may still be needed for office supplies, furniture, and equipment
COMMERCIAL AUTO: covers vehicles owned by the nonprofit organization and the employees that drive them. If no vehicles are owned, Hired/Non-Owned coverage can protect the nonprofit’s employees or volunteers using their own vehicles to run errands, transport clients, etc.
EMPLOYEE DISHONESTY: replaces any money stolen from the organization by an employee
CYBER LIABILITY: protects any donor, client, or employee data that is stored on servers, desktop computers, or laptops
PRODUCT LIABILITY: protects the insured against customers claiming they have suffered damages from unsafe or defective products. If a nonprofit organization raises funds by conducting bake sales or selling artisanal wares, they should consider protecting against claims with Product Liability coverage
SEXUAL MISCONDUCT LIABILITY (aka Abuse & Molestation Liability): especially important for churches, this coverage offers legal defense and claim settlements that are usually excluded from general and professional liability
COMMERCIAL UMBRELLA: an optional, additional coverage that goes above and beyond the underlying liability protection you have to provide legal defense and claim settlements in the event of a lawsuit