Nonprofits are organizations that operate to help the community, whether through charitable work or social advocacy efforts. However, just like any other business organization, nonprofits are exposed to various risks that could cause significant financial losses. For this reason, it’s essential to have the appropriate insurance coverage to protect the organization’s interests. In this article, we’ll discuss the essential things you need to know about business insurance for non-profits.
Understanding Business Insurance for Nonprofits
General Liability Insurance
General Liability Insurance covers injuries or damages to property caused by the nonprofit organization’s operations. This coverage includes protection against third-party injuries, property damage, and lawsuits related to these incidents. General Liability Insurance provides coverage related to the organization’s premises and operations, products and completed operations, personal and advertising injury, and medical payments coverage. It’s important to note that this insurance does not cover intentional misconduct, professional errors or omissions, and automobile accidents.One example of why General Liability Insurance is essential is when a member of the public trips and falls on the nonprofit’s premises. The individual is injured and needs medical attention. If the person decides to take legal action against the organization, General Liability Insurance will cover the expenses related to the lawsuit.
Property Insurance provides protection for the nonprofit organization’s assets, such as buildings, equipment, and records. This coverage includes protection against theft, damage from fire, water damage or natural disasters, and vandalism. Property Insurance coverage is essential for physical assets that generate revenue for the organization.For example, a nonprofit organization that owns a community center, which generates revenue by renting out spaces for events, must have Property Insurance. If there is a fire or weather-related damage to the building, Property Insurance covers the costs of repairs or replacement.
Workers’ Compensation Insurance
Workers’ Compensation Insurance is critical for nonprofit organizations that have employees. This insurance provides coverage for medical treatment, rehabilitation, and lost wages resulting from employee injuries or illnesses that occur in the course of their employment. Workers’ Compensation Insurance covers expenses related to injuries and illnesses, whether they occur on or off the job. For example, a nonprofit organization’s accountant falls ill while traveling for work. Workers’ Compensation Insurance covers the individual’s medical expenses, lost wages, and rehabilitation costs until they recover and are able to return to work.
Director & Officer Liability Insurance
Director & Officer Liability Insurance offers protection to the nonprofit organization’s leaders, directors, and officers. This coverage offers indemnity to directors and officers when are accused of wrongful actions, managing the organization’s finances, or making decisions that have a negative impact on the organization’s stakeholders.For example, if the nonprofit organization’s director is sued for misappropriating funds, Director & Officer Liability Insurance covers the expenses related to the lawsuit and any settlements that may arise.
Employment Practices Liability Insurance
Employment Practices Liability Insurance provides protection against lawsuits resulting from wrongful employment practices, such as discrimination, harassment, or wrongful termination. This insurance covers legal fees and settlements, including all costs accrued in tribunals and hearings.For example, if a nonprofit organization’s employee files a lawsuit for sexual harassment, Employment Practices Liability Insurance covers the organization’s legal defense costs and any settlements.
Special Event Liability Insurance
Special Event Liability Insurance covers events that are not part of the nonprofit organization’s usual course of business. This policy covers any liabilities and losses related to injuries, property damage, or wrongful death during the event. For instance, a nonprofit organization holds a fundraiser event that serves alcohol at the venue. If one of the attendees becomes severely intoxicated and causes a car accident, Special Event Liability Insurance covers the damages and injuries caused by the individual.