Non Profits Insurance – A Guide to Developing Your Not For Profit Insurance Program

Are you on a nonprofit board and trying to determine what insurance coverage to implement for your organization? Nonprofits insurance can be overwhelming, and there are certain coverages that every non-profit should carry. Not for profit organizations are susceptible to litigation as easily as for profit companies, and it is important that you have protection for yourself and the organization should a lawsuit arise. If you are on a board you probably know that your non-profit organization should carry Directors and Officers liability to protect against lawsuits alleging mismanagement of the organization. This article will help define what coverages your non profit organization should carry besides Nonprofit D&O.

General Liability Insurance for Not For Profit Organizations

Nonprofit organizations can be involved in various types of work, but almost always their cause extends to contact with 3rd parties. Whether you are working at a booth at a convention or holding a public event there is the chance that someone could get injured and blame you. General Liability insurance will provide protection should your negligence cause bodily injury or property damage to a third party. General Liability is a key component of a nonprofits insurance program.

Hired and Non Owned Auto Liability For Nonprofit Organizations

As a nonprofit organization you may think that you have no liability if one of your employees or volunteers gets in a car accident. The fact is that the organization is susceptible to a lawsuit if the driver of a vehicle is in an accident while in the course of his or her duties for the non-profit. Auto accidents can cause severe damage to the vehicles involved as well as the people. Medical costs can be enormous, and most personal auto liability policies do not provide enough coverage to cover all the medical costs. The nonprofit organization is going to be named in the lawsuit as soon as a lawyer finds out the at-fault driver was driving for the non-profit. If you do not have hired and non owned auto liability coverage your non profit organization will be left to defend and pay damages from this type of lawsuit. Your nonprofit insurance program needs to include this type of coverage.

Employment Practices Liability for Nonprofit Organizations

You may think that your non-profit organization is full of moral individuals who would never commit an act that would cause a lawsuit. But in further analysis insurance carriers have found that there are a number of factors that make non-profits more susceptible than their for profit counterparts.

One reason non-profits have a high frequency of EPL claims is due to the nature of their employees or volunteers. The employees and/or volunteers of non-profits tend to range in age and backgrounds. Older workers or volunteers may come from the “old school” way of doing things, and may have different views on how to treat co-workers. Inappropriate jokes, comments, or actions towards fellow employees, volunteers, or third parties may result in a lawsuit that could potentially bankrupt your organization. Even if the charges are unfounded, the cost to defend your non profit organization will be costly.

Another reason that non-profits are susceptible to employment practices liability claims is that there are typically not the same controls in place to limit inappropriate behavior as would be found at a for profit entity. Non-profit organizations operate on a strict budget and do not have funds to provide training for employees or volunteers on what is the proper work place etiquette. Also hiring or firing practices may not follow the same stringent guidelines that a for profit company would have. EPL insurance as a component of your nonprofits insurance program can give you the comfort to know that you have protection should a lawsuit arise.

Nonprofits Insurance

Overall, nonprofits should consider insurance to be an important part of their risk management strategy. General Liability, Hired and Non Owned Auto Liability, and Employment Practices Liability are coverages that you should strongly consider when implementing you insurance program. Every nonprofit is different and we recommend you consult with a qualified insurance agent.

Contact Ahmann-Martin: To build an insurance policy that will be effective and affordable, you need a company that customizes your policy for you. Visit us at Small Business General Liability Insurance to consult with an insurance professional who will construct a Nonprofit Directors and Officers Insurance policy that will work for you.

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Carl Godziek is an experienced insurance professional, working with Ahmann-Martin in suburban Minneapolis. His practice is focused on providing affordable insurance alternatives for Directors and Officers Liability Insurance.