Nonprofits may not be out to make a profit, but they operate in a very similar business model as their for-profit counterparts. They have employees, they have assets, and they need to protect themselves from risk. That’s why it’s important that nonprofits take a good look at their potential liabilities and invest in the right insurance policies for them.
A typical nonprofit will need a number of different insurance policies to cover the various risks they face. The personal finance website The Balance outlines several common types of policies that nonprofits need to consider in their search for the perfect policy.
General liability insurance: This is one of the most common and essential forms of insurance that nonprofits need. It pays for damage to third parties and injuries that your nonprofit causes through its activities. It’s often combined with commercial property insurance and crime coverage in a commercial package policy, which can be more affordable than getting standalone policies for each.
Auto insurance: Nonprofits rely on vehicles, both owned and leased, to move around their people and products. Whether it’s transporting a senior to a doctor appointment or picking up donated items for an auction, having proper auto insurance is crucial. In the event that a vehicle is involved in a crash, a nonprofit will need auto liability coverage to pay for medical expenses and repair costs.
Crime insurance: Like many organizations, nonprofits are a target for unscrupulous individuals who might steal funds or other assets from the organization. Having crime insurance can replace stolen money and help deter fraud in the future. Some foundations and municipal contracts require proof of this type of coverage before awarding a grant.
Workers’ compensation: As an employer, a nonprofit must provide its full-time employees with worker’s compensation insurance. The Society for Human Resource Management estimates that it can cost up to 6-9 months’ salary to replace a single employee, so it’s in the best interest of a nonprofit to provide this vital benefit for its people. It’s also a good idea to offer rich healthcare options, like telemedicine and low deductibles, that can keep employees healthy and productive.
Directors and officers insurance: Board members of a nonprofit have a unique set of responsibilities that can put them at risk for claims of mismanagement, including sexual harassment or discrimination. Directors and officers insurance can pay for legal fees and damages if a lawsuit is filed.
Insurance specialists who work with nonprofits can help determine what types of coverage are needed for your organization to thrive. It’s important to find an advisor that takes the time to understand your goals and values as well as your vulnerabilities, so they can guide you through the process of finding the right policies for your nonprofit.
While the price tag of some types of insurance can be intimidating for nonprofits, the alternative is losing your entire operation to a single unexpected loss. If you’re looking for a reliable, experienced insurance advisor to guide you through the process, reach out to us. do nonprofits need insurance