February 24, 2023
Agency
How Does Nonprofit Insurance Work?
Although nonprofit organizations may differ from for-profit businesses and companies in various ways, they may face similar risks and perils. While nonprofits may need to account for significant exposures, they may have different financial resources to fall back on when responding to an incident. So these organizations must construct and maintain a comprehensive insurance portfolio.
How Does Nonprofit Insurance Work?
In most cases, nonprofit insurance does not refer to a specific type of coverage. Instead, organizations will likely need to bundle several policies together to create a sufficient insurance package. Although many nonprofits may have similar risks and exposures, all organizations have at least some unique circumstances, so every nonprofit’s insurance portfolio may differ. Regardless of specific contents, once an adequate insurance portfolio has been constructed, it can provide crucial financial assistance in response to various incidents.
What Types of Insurance Do Nonprofits Need?
In most cases, nonprofit organizations should begin addressing their insurance needs by acquiring the following coverages:
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General liability insurance—This coverage can help pay for third-party losses for which an organization was responsible, such as those arising from the following incidents:
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Bodily injury
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Property damage
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Personal and advertising injury (e.g., copyright infringement, slander, libel, false advertising)
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Commercial property insurance—By including this type of coverage in an insurance portfolio, a nonprofit may be able to recoup losses involving its property, including the following:
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Structures
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Equipment
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Tools
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Inventory
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Furniture
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Signage
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Landscaping
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Product liability insurance—If a customer or client accuses a nonprofit of selling or distributing defective or unsafe products, this type of insurance can cover their losses.
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Workers’ compensation insurance—In response to employees being injured on the job or developing a work-related illness, this coverage may provide financial assistance for the following:
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Medical bills
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Lost or reduced wages
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Disability benefits
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Death benefits
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Employer legal expenses
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Directors and officers insurance—This coverage can shield a nonprofit’s senior leaders if they are accused of wrongdoing and may help pay for the following legal expenses:
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Representation
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Settlements
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Judgments
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Employment practices liability insurance—This coverage can insulate a nonprofit from losses if a former, current or prospective employee files a lawsuit alleging improper workplace practices, such as the following:
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Discrimination
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Harassment
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Retaliation
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Wrongful termination
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Improper hiring practices
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Failure to promote
In addition to the aforementioned core coverages, the specific operations of a nonprofit may make it necessary to augment insurance portfolios with additional policies. For example, organizations that regularly use motor vehicles should acquire commercial auto insurance. Similarly, nonprofits that deal with sensitive information or provide professional services should strongly consider cyber liability and errors and omissions insurance, respectively.
Does a Nonprofit Need Insurance?
Regardless of size or operations, all nonprofit organizations should prioritize a robust and diverse insurance portfolio. Without ample protection, even the safest and most diligent organizations could face financial ruin with a single accident or error.
With over 125 years of experience, the experts at FSB Insurance and C&T Insurance are well-equipped to help nonprofits assess and address their coverage needs. Contact us today to get started.
This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information.
Categories: Blog
Tags: business, commercial, coverage, insurance, non-profit