Non-Profit Insurance: What Large Organizations Need

Non-profit organisations should carry insurance to protect themselves from financial loss. While insurance doesn't remove the risk, it does limit the financial impact of any insurable risk. Non-profits often have smaller budgets, so a single large and unexpected expense could lead to financial ruin. There is no master list of the types of insurance policies that non-profits should purchase, but there are several types of insurance that are commonly recommended for non-profits. These include general liability insurance, commercial property insurance, business income insurance, commercial auto insurance, data breach insurance, workers' compensation insurance, directors and officers liability insurance, and professional liability insurance.

General liability insurance

This type of insurance also covers advertising injuries, including defamation (libel or slander), copyright or brand infringement, and false advertising. It is often necessary for events, contracts, and funding.

The cost of general liability insurance for nonprofits depends on the specific risks of the organisation, but the median cost is around $45 per month. Non-profits can also bundle general liability insurance with other types of insurance, such as commercial property insurance, in a business owner's policy (BOP), which is usually more economical than purchasing separate policies.

While general liability insurance is crucial, it does not provide complete protection. Non-profits should also consider other types of insurance, such as directors and officers insurance, professional liability insurance, and workers' compensation insurance, to ensure they are adequately protected.

Directors and officers insurance

D&O insurance is important because it protects the personal assets of directors and board members. Without it, board members may be held personally liable for the actions of the organisation, which could put their money, property, and other assets at risk. D&O insurance can also help non-profits attract and retain qualified directors and board members by providing peace of mind and financial security.

D&O insurance typically covers allegations of wrongful acts, including breach of duty, errors and omissions, and other acts that cause harm to the organisation or its stakeholders. It can also cover sexual harassment claims, defamation, and copyright infringement. However, it is important to note that D&O insurance does not cover physical damages caused by a director, which would be covered under general liability insurance.

When purchasing D&O insurance, non-profits should ensure that the policy includes employment practices liability (EPLI) coverage. This is important because employment-related claims are the most common type of D&O claim filed against non-profits. Non-profits should also consider purchasing a D&O policy that includes publishers' liability and personal injury coverage if they publish newsletters, marketing materials, or other similar content. This provides broader coverage for libel, defamation, copyright, or trademark infringement claims.

The cost of D&O insurance will depend on the size and nature of the non-profit organisation, as well as the level of coverage required. Some insurance providers offer flat-rate D&O insurance for small non-profits with no employees, which can be a cost-effective option.

Commercial property insurance

When purchasing commercial property insurance, non-profits should consider the specific items and equipment they have and ensure that they are adequately covered. This includes items such as lighting systems, carpeting, equipment, machinery, computers, and accessories. It is also important to ensure that the policy covers the cost of replacing the property, rather than just the market value as a used item.

In addition to basic coverage, non-profits may want to consider adding on additional coverages such as flood insurance or theft coverage, as these may not be included in the standard policy. For non-profits that own computers or electronic equipment, a separate computer or electronic data processing policy can be purchased, which offers broader coverage for losses due to power surges, hard drive crashes, and viruses.

Another option for non-profits is to purchase a Business Owners Package Policy (BOP) or a commercial package policy, which combines general liability, property, and crime coverages into a single policy. This can often be more economical than purchasing separate policies.

By having commercial property insurance, large non-profits can protect themselves from financial ruin in the event of unexpected incidents or natural disasters. It is important for non-profits to carefully review the terms and conditions of their policies and ensure that they have adequate coverage for their specific needs.

Business income insurance

When considering business income insurance, it is important to understand what types of property damage are covered. For example, flood insurance is usually sold separately, and your organisation may have to pay extra to include theft coverage. It is also important to review your deductible, or the amount your organisation will need to pay out of pocket before the insurance coverage kicks in.

In addition to a BOP, there are several other types of insurance that large non-profits should consider. These include commercial auto insurance, which covers company-owned vehicles, and data breach insurance, which can help your organisation respond to a breach of personally identifiable information. Other relevant types of insurance include directors and officers insurance, workers' compensation insurance, and employment practices liability insurance.

By carefully assessing the unique needs of your non-profit organisation and selecting the appropriate insurance coverage, you can help ensure that your organisation is protected from financial losses and unexpected expenses.

Commercial auto insurance

There are several types of commercial auto insurance policies to choose from, including:

• Commercial – vehicles owned by a business
• Hired – rental cars
• Non-owned – cars owned by volunteers and staff

The cost of commercial auto insurance depends on various factors, including the vehicle type and value, the level of risk involved, location, employee driving records, policy deductible and limits, and more. It is important to note that commercial auto insurance does not cover tools and materials transported in the vehicle unless they are permanently attached.

In addition to the basic coverage, there are other commercial auto coverage options to consider for more comprehensive protection:

• Uninsured/underinsured motorist coverage – insures against personal injuries and damage caused by a company vehicle when the at-fault party cannot cover the full cost of damages.
• Medical payments coverage – pays for medical expenses if employees or passengers are injured in a company-owned vehicle, regardless of who is at fault.
• Collision coverage – helps pay for the cost of repairing or replacing a company vehicle if it is damaged in an accident, regardless of fault.
• Comprehensive coverage – covers the costs of non-collision damages such as vandalism, theft, flood, or fire.
• Towing and labour coverage – covers the cost of roadside assistance for company-owned vehicles.
• Loading and unloading coverage – insures against damage to equipment and materials during transport, loading, or unloading.
• Bobtail coverage – recommended for tractors without trailers and typically covers the insured vehicle at all times, including non-work-related use.
• Personal injury protection (PIP) – helps cover necessary expenses like medical bills after a car accident and is required in some states.

By understanding the specific needs of the non-profit organisation and consulting with an experienced insurance professional, a comprehensive commercial auto insurance policy can be tailored to provide adequate protection.

Frequently asked questions