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Insurance for Nonprofits: What Insurance Should A Nonprofit Have?

Insurance for Nonprofits: There are many different circumstances or reasons a claim might be brought to the door of a nonprofit organization. People and groups can, and do, sue nonprofits unfortunately, which is why even non profits will want to have the proper protection and insurance for their organization.

The majority of non-profit organizations need General Liability and Directors and Officers (D&O) coverage. Workers compensation insurance, as well as other insurance supplied to employees as perks such as health, dental, and life insurance, may be required if the company has employees.

Read on for further information on the several forms of insurance that are important to non-profit organizations, also known as NGOs.

Public Liability Insurance

This insurance is most often required for non-profits. The cost of this kind of insurance is determined by a variety of criteria, including the types of programs you provide, if you have volunteers, whether your customers come to your location, and so on.

Accident-related claims for personal injury or property damage are covered by general liability insurance. There are three elements to this type of policy: Coverage A, Coverage B, and Coverage C.

Here are some examples of claims that fall under Coverage A:

Injuries that occur on the insured’s property

Injuries to clients when the insured is in charge

Guests’ injuries during special events

Injury caused by items sold or manufactured by the insured

The insured’s landlord’s building was damaged by fire.

Libel, slander, false arrest, malicious prosecution, wrongful eviction, unlawful entrance, breach of privacy, infringement of copyright, and illegal use of an idea in advertising are all covered under Coverage B (personal injury and advertising injury responsibility).

Unless it is confined to specified premises, Coverage C (medical payments) offers accident coverage on the nonprofit’s facilities or during activities the organization performs outside the grounds.

Workers’ Compensation

Workers’ compensation will provide coverage for employees who get injured on the job. This type of insurance is mandatory in every state except Texas. This coverage will provide for medical expenses and wages if an employee gets injured while working for the nonprofit.

Policy for Business Owners

A business owners policy (BOP) or commercial package insurance, which combines general liability, property, and criminal coverages into one policy, may be available to your company. Acquiring a bundle policy is frequently less expensive than purchasing individual plans. This is something that your insurance adviser (agent or broker) can assist you with.

Insurance for Directors and Officers

The board of directors and officials of your organization (many of whom are volunteers) might be personally identified in a lawsuit claiming fraud or financial mismanagement. A creditor could sue the organization as well as its directors and officers if a board member invests the group’s funds unwisely and loses everything. In this situation, directors and officers’ (D&O) insurance would cover the expense of defending the directors and officers as well as any monetary damages that may ensue.

Liability of Directors and Officers

A directors’ and officers’ liability coverage is another option to explore. The D&O policy safeguards the organization, its directors, officers, employees, and volunteers against liability for “wrongful conduct” committed while governing and managing it. The number of persons covered is determined by the kind of insurance purchased by the company. Allegations of breach of duty, mistakes, and omissions, and other actions that affect the organization or its stakeholders are referred to as wrongful acts. The D&O insurance does not cover physical injury or property damage; they are covered by the general liability policy or maybe another liability policy.

If the organization publishes a newsletter, marketing materials, or other materials, D&O insurance that covers publisher liability and personal harm should be considered. This insurance covers libel, defamation, copyright, and trademark infringement more comprehensively than a general liability policy.

The fundamental rationale for the D&O policy is that, notwithstanding state and federal volunteer protection provisions, board members might be sued for unlawful management actions and forced to defend themselves. In the absence of a significant lawsuit defense fund or a proper D&O policy, the organization’s commitment to indemnify its board members (included in the great majority of nonprofit Bylaws) is generally a hollow promise. Unless the organization is very tiny, the basic limit should be $1 million per claim/$1 million in total. When a nonprofit’s leaders think its exposure is higher than normal, or when generous board members are uncomfortable acting as leaders in the absence of a policy with higher limitations, higher restrictions are warranted.

Which Insurance is Best For My NGO?

Without question, nonprofit organizations need liability insurance. Failing to get the right insurance policies with the right coverage limits and deductibles places board members unnecessarily at risk. At Daigle and Travers, we can help you and your nonprofit choose the best insurance for you and keep your organization protected at all costs.