How Is Non-Profit Insurance Different Than Business Insurance?

Even if you're providing free services to the needy, you'll likely need non-profit insurance. It's important to maintain comprehensive liability coverage so that your non-profit is well-prepared to run smoothly in the event of a financial disaster.

In many ways, non-profit insurance coverage is similar to comprehensive business insurance coverage. A strong non-profit insurance plan can boost an organization's effectiveness. Without such protection, however, a non-profit can be at risk of failure.

Your policy needs be flexible enough to protect volunteers and employees. It should also have several other components to ensure safety. Below are the biggest differing factors between non-profit insurance coverage and general business coverage.

1. Independent Contractor Coverage

The non-profit world isn't usually governed by industry standards, commercial needs or an intensive employee payment process. You'll likely conduct most paying work through contractors.

Business insurance is usually kind to the independent contractor. But a surprising amount of business coverage plans don't cover independent workers. You'll need to make sure you have considerable coverage to protect your independent contractors.

2. Higher Umbrella Coverage

Umbrella insurance covers what the "loose ends" of a business insurance policy. Non-profits tend to expand beyond set-in-stone business dealings. They're more likely to require coverage beyond general liability coverage.

That isn't to say crime insurance, auto insurance and property insurance — all staples of many business insurance policies — aren't important. They are, but they're less likely to cover a non-profit's sometimes nebulous business needs.

3. Comprehensive Product Liability Coverage

It isn't uncommon for non-profits to sell goods to the public. If you're raising funds by selling goods, you'll likely need product liability insurance. More specifically, you'l need comprehensive product liability coverage.

Don't plan around a single product line. Instead, go for a plan offering full-fledged consumer safety coverage options. You need a strong insurance policy to cover your nonprofit's assets if a lawsuit or damages occur.

4. Officer and Director Insurance Coverage

Your non-profit's insurance coverage needs to expand well beyond typical business insurance.

A non-profit is generally organized by officers and a board of directors. Many of these are volunteers. However, if someone sues your non-profit, they could name each person in the lawsuit.

You should defend everyone involved in your establishment to ensure the payment of damages and watch your non-profit grow.

Getting non-profit insurance can be tricky. We are happy to offer tips on choosing the coverage that is right for you. Call Full Armor Insurance Services, LLC at (208) 664-6000 to request a free Idaho non-profit insurance quote.