Nonprofit organizations need adequate insurance just as much as a for-profit business. Members of nonprofit boards may or may not have experience as business managers. They should consider business insurance in the same careful way as a for-profit organization.
What Kinds of Claims Typically Threaten Nonprofit Organizations?
Nonprofits need commercial property insurance to protect their buildings and other assets. Board members who own homes, businesses, or even vehicles can understand this coverage.
Coverage should also include basic liability insurance to cover accidental injuries, at minimum. However, the organization's leadership may not understand how liability against claims of accidental or purposeful damages can sometimes present a more complex problem than protection against a simple slip-and-fall case.
Pamela Davis leads groups that help nonprofits understand insurance. She offered some information about the kinds of claims commonly made against nonprofits:
- Accidents and injuries: The vast majority of claims arise from slip-and-fall accidents. A large portion also come from vehicle accidents. Typically, claimants ask for modest sums to cover damages. Basic liability policies may cover these costs.
- Employment practices liability: These less-common types of claims come from allegations of employment misconduct, like harassment. Basic general liability insurance also probably doesn't cover these sorts of claims. You usually have to carry EPLI insurance.
- Auto insurance: For example, an organization may buy commercial car insurance. However, a volunteer or employee might use their own car in service to the nonprofit. It's only prudent to ensure this kind of thing has coverage in case the vehicle owner didn't buy adequate insurance.
- Insurance for directors: Nonprofit boards may also be prudent to consider directors and officers insurance to protect themselves. Individuals need professional liability insurance to cover work they do for the nonprofit. Boards should enforce policies that compel workers to have their own coverage. Otherwise, the nonprofit needs to purchase this coverage. In any case, board members need to consider risks that could threaten the organization.
Why Spend Time Considering Nonprofit Insurance Needs?
Some claims could take funds away from the worthy cause that the organization supports. In many cases, these claims could even threaten the board members. In an era when funds for nonprofits may be tight, it's important for board members to focus on both the most common and most damaging potential threats to their organization. This is part of the risk management that all organizations have to do.
Full Armor Insurance Services, LLC has your nonprofit’s insurance needs in mind. If you’d like a fast, free quote, one of our agents is here to help. Call us at (208) 664-6000 for more information.