Understanding the Basic Types of Liability Insurance for Nonprofit Organizations

Nonprofit Organizations

For the most part, nonprofit organizations operate like any other business. However, there are some key differences. Among those is the need for certain types of insurance. Research into nonprofit liability insurance shows these basic components that you should be aware of.

General Liability

As with any type of business, nonprofits must protect their assets with appropriate liability insurance. This should offer sufficient limits to limit any losses if a claim is made.

Contractors

Ensure that any contractors you work with to provide services are fully insured. Consider asking to be named as an additional insured on their policy for an added layer of protection.

Directors and Officers

Nonprofit directors and officers can be held liable for damages caused by the organization. Common claims that your D&O policy should cover include:

  • Organizational mismanagement
  • Improper employment practices
  • Copyright or trademark infringement
  • Slander and defamation
  • Invasion of privacy

Volunteers

Many nonprofits utilize volunteers to further their mission. Just like a paid employee, those volunteers can be injured or cause injury to others. That makes them a potential liability. There is also a risk of fraud, embezzlement or other forms of dishonest behavior. Any volunteer liability coverage should address these concerns.

Each nonprofit organization has a unique set of needs and requirements. Understanding what each type of insurance covers can help you determine exactly what coverage you need.