Insurance Options for Non-Profits
When we think of nonprofit organizations, many admirable qualities come to mind. We envision charities, foundations, and social advocates—those who have turned their humanitarian passion into well-executed efforts for change. While all of that is right on, it’s really the tip of the iceberg, as the collective impact of nonprofits is undeniable. Stats suggest that their economic output is huge in the U.S. alone, not to mention the value of the lives touched by their outreach. It is truly an amazingly powerful, positive industry.
That being said, if you run a team that is contributing to this mighty force, it’s important to take every precaution you can to protect it. That’s right! We’re talking insurance, and unfortunately, it’s not uncommon for nonprofits to leave themselves vulnerable by skipping out on some valuable coverage. While some insurance is mandated by local and state governments, that doesn’t mean that they’re an ideal safeguard in every instance. Do you know where your coverage lies beyond the must-haves? If you don’t, the time to assess your level of protection is now.
In spite of the billions that the nonprofit sector puts into the American economy, not all are operating with billion-dollar budgets, making any liability they stumble into a serious concern. Coverage costs can be a deterrent to those with little financial wiggle room, but in most cases, the pros of budgeting for proper insurance far outweigh the cons. If a million-dollar+ lawsuit would spell the end of your efforts, you’re not alone. We’ve got a list of some insurance options you may want to consider.
10 Ways to Cover Your Bases:
- Unemployment, Disability, and Worker’s Compensation – We begin at the beginning with these three, and for good reason—although legal requirements to carry these insurances differ based on location, they are often necessary if you hire a staff to work for you. Unemployment insurance provides temporary money to employees in the case of a layoff or resignation, worker’s compensation affords financial help for those hurt on a job site, and disability pays out when sickness or ailment takes one permanently out of work.
- Director’s and Officer’s Insurance – This type of coverage is especially important if your nonprofit has a board of directors overseeing its day-to-day operations. In essence, it prevents folks from levying lawsuits against specific officers and board members, except in cases of illegal activity.
- General Liability Insurance – Pay close attention, because this one is a biggie: general liability insurance is widely considered an absolute necessity for all companies, even ones that don’t primarily work to yield a profit. This covers all cases of harm (physical or material) that results from anything you do, whether there’s a car accident at your location or someone is hurt at a fundraising event.
- Professional Liability Insurance – This style of insurance is similar to general liability but focuses more on claims against a service-based organization. For example, let’s say your nonprofit aims to help at-risk teens find employment or college funding. If you’re not able to deliver on that promise to everyone, you could open yourself up for a lawsuit claiming misrepresentation, which is where professional liability would come into play.
- Volunteer Liability Insurance – Again we find a more tailored type of liability insurance, with this one geared toward your unpaid volunteers. It’s important to note that each liability policy you take has a maximum payout amount— while general liability often covers volunteer workers, purchasing individual insurance just for them keeps more cash on reserve for other claims you may encounter.
- Product Liability Insurance – “I run a non-profit organization, not a traditional business; why would I need coverage for products?” If that’s the thought running through your mind right now, think again. Product liability insurance covers potential damage caused by any physical item you offer, from donor gifts to charity sales and beyond. If it came from you and it hurts someone, you could wind up on the hook without it, so it’s definitely a solid option to consider.
- Property Insurance – This type of coverage insures the physical items your organization needs to keep changing the world, from computers and desks to the building itself. Generally speaking, these policies will replace items in the event of a natural disaster, or if your space is burglarized or otherwise ruined.
- Auto Insurance – When it comes to your personal vehicle, auto insurance is a no-brainer, but have you thought about your volunteers and employees? This common-sense coverage definitely applies if your organization has its own fleet of cars, but even if it doesn’t, there are policies that can be written to keep you financially safe should a representative of your team get involved in an offsite crash.
- Employee/Volunteer Dishonesty Coverage – If your organization is a collective effort, you put a lot of trust in your volunteers and employees to get the job done right. Unfortunately, people are not always what they appear to be, and that could leave you vulnerable to some shady dealings. If a trusted team member steals from or otherwise financially manipulates your nonprofit, cue employee/volunteer dishonesty coverage to step in and make things right.
- Renters/Homeowners Insurance – This one goes out to the nonprofits that are just starting out. If your efforts pour from the comforts of your own home, you might want to take a second look at your existing renters or homeowner’s policies. Truth is, a lot of them only cover claims from personal use of the property, and anything pertaining to your nonprofit could cost you a whole lot more in the long run. Make sure you know the details of your coverage before you begin and avoid a lot of messy (and costly) issues later.
If there’s one thing that can be safely said about all of these options, it’s that there are many variables to consider—in most cases, the coverage is written for the individual organization, not as a blanket policy with set rates or claim limitations. Worried that the devil is in those details? One sure way to get a better understanding of your coverage is by reaching out to a financial professional knowledgeable about liability coverage. They’re in the business of protecting your business, taking your vision into account and guiding you toward protecting it every step of the way. Don’t be afraid to give them a call and help your nonprofit rise to every occasion.
AXA Advisors, AXA Network, and their financial professionals do not offer property and casualty insurance.
PPG-144264 (3/19) (Exp. 3/21)