To protect your employees, you need insurance. Insurance for nonprofits can be expensive, or it may not offer the required coverage.
Finding the right type of insurance for a nonprofit depends on several factors. Professionals unfamiliar with nonprofits may misunderstand the unique needs of them. To find the right insurance for your nonprofit, use this guide.
What Type of Insurance Does My Nonprofit Need?
Choosing the correct insurance for nonprofits is challenging. Some insurance groups claim to offer the specialized expertise you require. Few are well-versed in your organization's custom needs.
The type of insurance needed for your nonprofit varies by your organization's size and industry. You may need protection for your employees, as well as the organization itself. This means exploring specialized coverage options.
Working with an insurance professional is the best way to determine the type of insurance for your nonprofit. Learning about the following types of insurance can help you. Then, you can comfortably speak with a qualified insurance agent.
As a small business, your nonprofit has unique needs for liability coverage. Below are some of the specific types of liability insurance available for nonprofits.
Directors and Officers/Employment Practices Liability
Executive directors and officers (also known as D&O) need management liability coverage. These often accompany coverage for employee practices, too. This type of insurance is most common for nonprofit policies.
D&O and employment practice liability covers wrongful acts. Wrongful acts include neglect of fiduciary commitments, discrimination, or sexual harassment.
Watch out for possible exclusions to this type of liability coverage. Certain insurance packages only cover certain wrongful acts.
Cyber liability insurance covers nonprofits for cybersecurity needs. Data breaches are more and more common every day.
These breaches can leak valuable data for employees and clients. Data leaks put donor information at risk, too. This type of insurance coverage is more essential than ever to protect nonprofits.
General liability insurance covers bodily injury or property damage claims. It also includes professional and abuse and molestation liability. Think of general liability as broader in coverage than D&O and employment practices liability insurance.
You need professional liability coverage when offering specific services. These can include counseling, mentorship, education, case managing, and more.
Abuse and molestation liability covers claims for accusations from employees, volunteers, and contractors. This specialized coverage works best for nonprofits serving youth, seniors, or members of disadvantaged groups.
Workers comp or accident insurance protects your people the most. Where employee practice liability protects the organization, this helps your employees. To help with one of the most common claims against nonprofits, explore this type of insurance coverage.
A unique nonprofit extension of workers comp is volunteer accident insurance. This includes coverage for minor injuries, too. It often falls under a general liability policy, which may exclude volunteers.
This type of insurance covers employee dishonesty and criminal behavior. If nonprofit employees steal funds, this policy covers these instances of fraud.
If donated funds were taken, crime coverage protects those funds. This is the only way to replace stolen funds. To maintain donors' trust and gifts, you should invest in crime coverage.
This type of risk management policy communicates to donors how seriously you take their investment. Even if a criminal act never occurs, this is the best way to protect your nonprofit organization.
Auto insurance policies for nonprofits cover rented and non-owned vehicles. If your organization operates a commercial vehicle (e.g., uses a logo, transports volunteers), you need commercial coverage.
Non-owned auto insurance covers minor claims. Use this when renting vehicles, running errands, or transporting clients.
Depending on the level of transportation used by your nonprofit, you may need more or less coverage. Consult an expert risk advisor to determine the level of coverage required.
Property insurance is often overlooked when managing risks for a nonprofit. If your nonprofit organization owns any valuable business property, insure it. Consult an expert risk advisor to determine your specific property insurance needs.
How Common Are Claims Against Nonprofits?
Most often, employees file lawsuits against nonprofits over salary or benefits. Otherwise, common claims against nonprofits occur with abuse or harassment claims from volunteers.
D&O claims are common, too. When former employees claim wrongful termination or discrimination by directors and officers, a D&O claim occurs. This often happens with disgruntled employees.
Protecting against these claims means choosing the right type of insurance policy. Read the fine print. You don't need policies that exclude the unique needs of your nonprofit organization.
Missing legal language is another common mistake. Overlooking policy exclusions is common, too. It's easy to misinterpret jargon that defines whether a policy offers comprehensive coverage or not.
The best way to avoid misunderstanding policy coverage is to consult a qualified professional. Consulting an expert is one of the best ways to manage potential risks for your nonprofit organization.
Where to Find Quality, Affordable Coverage for Your Nonprofit
You want to select the right type of insurance for your nonprofit. This means working with a nonprofit risk advisor who understands your needs.
You want to work with an insurance agent who helps you navigate new risks. As you grow, you also want to limit unnecessary insurance expenses.
Work with the Hummel Group to avoid costly insurance claims and remove potential nightmare PR scenarios. We've got you and your people covered. We help increase safety, reduce liabilities, and provide health coverage and benefits for your team.
Contact us today for a free risk assessment. Let's get started exploring your custom risk management needs.