What Insurance Does Your Nonprofit Organization Need?

What Is Nonprofit Insurance?

Nonprofit organizations may not be for-profit, but that doesn't mean they aren't businesses. Just like any other business, they face risk in their day-to-day operations. Most nonprofits use volunteers, which opens you up to different risks some businesses don't face. Obtaining the right insurance for your nonprofit can mean the difference between operating long-term, or having to shutter your doors.

Who Needs Nonprofit Insurance?

What types of nonprofits do most insurance companies cover?

• ​Arts and cultural organizations
• Community health clinics
• Educational organizations
• Pet adoption agencies
• Environmental conservation organizations
• Fundraising organizations/foundations
• ​Historical societies
• Mental health facilities and counseling centers
• Homeless shelters
• Shelters for Abused Women and Children

This isn't an exhaustive list of nonprofits, but if your organization is categorized as a 501(c)(3) you fall under the nonprofit umbrella.

General Liability Insurance for Nonprofits

Every business needs to invest in general liability insurance. This insurance policy is necessary in the case of third-party bodily injury, property damage, advertising injury, and monetary protection in case of a lawsuit.

• Third-party bodily injury: If someone is injured while at your nonprofit, you can be held liable for the cost of their medical expenses and may have to pay a potential settlement if they sue for claims of negligence. But a general liability insurance can step in to pay the settlement cost.
• Third-party property damage: If a customer slips and falls and their property is damaged, you're liable to repair or replace the damaged item—which your general liability insurance can do.
• Advertising injury: This clause covers claims of defamation (libel and slander) as well as copyright infringement. General liability insurance can step in to pay for a lawyer and potential settlement costs for nonprofit organizations.

What Types Of Policies Should You Consider?

Insurance needs vary depending on the type of nonprofit you run and the risks you may face. Some of the most common coverage you may need for your organization include:

• Commercial Property insurance: Nonprofit organizations can't afford to replace property or products stored within if they're damaged or destroyed by fire or natural disaster, or they're stolen. Property insurance coverage steps in to cover repair or replacement costs for your business.
• Commercial Auto insurance: If your nonprofit organization works frequently with volunteers, you likely own a commercial van or vehicles to shuttle people around. Make sure you secure commercial auto insurance to protect your vehicles, passengers, and other motorists.
• Volunteer Accident Policy: This is often covered under general liability insurance. However, If your company frequently work with volunteers, consider adding this policy for further protection. It can help cover minor medical expenses if a volunteer is injured on the job—no matter who is at fault.
• Equipment Breakdown Coverage: Also referred to as Boiler and machinery insurance, this is beneficial for nonprofit organizations that are based in an office location or building. If your furnace, boiler, A/C, or other equipment breaks down, this helps cover replacement and/or repair costs.
• Cyber Liability Insurance: Sometimes referred to as 'Data Breech' coverage, you need this if your organization handles private consumer information or data. This policy provides coverage if your computer systems are hacked, infected with malware, or employees make an error.

Other Important Insurances to Consider

What other insurance might a non-profit organization want to consider? Here are a few others:

• Business Owners Policy: A Business Owners Policy—typically abbreviated BOP—combines property insurance, general liability coverage, and business interruption insurance. It can often be bundled with other policies but it varies from insurance company to insurance company.
• ​Professional liability insurance: Also referred to as Errors and Omissions coverage, professional liability insurance covers you in case your professional advice leads to a lawsuit.
• Workers' Compensation Insurance: If you hire employees to work for your nonprofit, Workers' Compensation insurance is a necessity. This policy provides coverage in the case of employee injuries or illnesses. It can provide coverage for their medical expenses and lost wages.
• Employment Practices Liability Insurance: If an employee sues your company due to claims of harassment, discrimination, wrongful termination, issues related to the Family and Medical Leave Act, or other employment-related issues, this policy helps cover your legal defense costs, including a settlement.
• Directors and Officers Insurance: Directors and officers liability insurance (also referred to as D&O insurance), covers directors, officers, and board members from liability if a lawsuit is brought against the nonprofit organization. This includes—but isn't limited to—accusations of fraud, misconduct, malpractice, or financial mismanagement.

Though comprehensive, this isn't an exhaustive list of the different policies nonprofits should consider. To learn more, talk to an experienced agent who can walk you through what coverages your nonprofit may need.

How Much Does Insurance for Nonprofits Cost?

What can nonprofits expect to pay for business insurance? Just like any other industry, the cost of your nonprofit's insurance will depend on the unique risks your nonprofit faces. Nonprofits can expect to pay between $400-$700 annually for general liability insurance. Ongoing costs will also vary depending on what additions are added. Some factors taken into consideration when calculating costs include:

• Number of employees
• Size and age of property
• The type of the organization
• Use of volunteers
• The services you offer
• The insurance company you choose

Please note that the information provided is just general information. To learn more and get an accurate quote for your nonprofit, feel free to reach out!

Get an Insurance Quote for Your Nonprofit

Nonprofit organizations can find it difficult to find the right business insurance. Let one of our trained professionals help you find a policy to protect your nonprofit organization. Chose the type(s) of policies you're interested in obtaining in the quote form above to get more information or give us a call at 877-907-5267. We will connect you with an agent knowledgeable in your area of expertise. They'll help connect you with free quotes and the right insurance company to fit your needs.