Nonprofit organizations are a unique type of business that provides goods and services for a good cause without the profit motive. These organizations are commonly referred to as charities, foundations or private organizations. While there are many benefits of nonprofits, they are also susceptible to the same risks as any other businesses. Fortunately, there are insurance policies that can help protect nonprofits from these risks. In this article, we will discuss what type of insurance does a nonprofit organization need and the types of coverage that are available to them.
The main risk that most nonprofits face is liability. This risk can come from many sources, including claims that the nonprofit was negligent in its conduct. Negligence is generally defined as failing to do what an ordinarily prudent person would do in a particular situation. Examples of negligence that can be claimed against nonprofits include injury to a third party on the nonprofit’s premises, false advertising or copyright infringement.
Most nonprofits need general liability insurance. This policy covers damages to a third party that occurs due to the actions of the nonprofit and can be purchased for a relatively low cost. Typically, this policy will cover property damage, bodily injury and rental property damage. Some versions of this policy will also include professional liability coverage (also known as errors and omissions insurance) and directors and officers insurance. These are important policies that can be added to the standard general liability policy at a fairly low cost.
Another type of insurance that a nonprofit should consider is crime coverage. Unfortunately, nonprofits are often a target for unscrupulous people who can steal money, equipment or other assets. Crime insurance can help to replace these items and can be required by certain municipalities or foundations before they will award grants.
Finally, if a nonprofit owns any vehicles then they need commercial auto insurance. This coverage is usually included as part of a package policy with general liability and may be added to on an individual basis depending on the needs of the organization. Nonprofits that hire drivers or use other vehicles that are not owned by the organization may need hired and non-owned auto insurance as well.
An independent insurance agent can provide more details about what insurance a nonprofit organization will need and help to determine the best policies for them. They can also review different deductible options for each policy to find the right balance between cost and coverage.
A nonprofit is a special type of business that requires a very specific type of insurance. The agents at ARC can work with you to ensure that your organization has all of the coverage it will need to help carry out its mission. Contact us today to set up a consultation! We can be reached by phone or email Monday through Friday. We look forward to hearing from you!