Given the shoestring budget on which many nonprofits operate, a single large and unexpected expense could lead to financial ruin. So, getting the right insurance to guard against the biggest risks is a wise move for nonprofits. The following types of insurance may be best for your nonprofit organization.

General Liability Insurance

Insures your nonprofit organization against classic slip-and-fall scenarios. (Also known as "commercial general liability" or "CGL" policy.) Your nonprofit will be covered for damages that it's ordered to pay to someone (such as a visitor, customer, supplier, or associate) who is injured on the organization's property. These kinds of policies don't apply to the nonprofit's employees, who are covered separately by workers' compensation insurance.

Property Insurance

Whether you own or rent the space your nonprofit occupies, consider what your organization might lose in the event of a fire, earthquake, vandalism, storm, or similar event. Then, buy property insurance that covers those risks, making sure it covers not only the building (if your organization owns it) but any:

• fixtures (such as lighting systems or carpeting)
• equipment and machinery
• office furniture
• computers and accessories (monitors, CD-ROM drives, modems, printers, and so forth), and
• inventory and supplies.

Most basic policies will cover these items -- but at what dollar amount? Make sure the policy covers the cost to actually replace the property, instead of paying its market value as a used good immediately before the damage.

Our experienced agents will take the time to explain your deductible and what types of losses or property damage will not be covered under the policy.

Running a nonprofit out of your home?

You may need to adjust your homeowners' or renters' insurance policy. Many exclude coverage of business-related claims, while others forbid business use of your home -- meaning that if you run a nonprofit there and the insurer finds out, your coverage could be limited or rendered void. Be up-front about your intended activities and get the appropriate insurance coverage in advance.

Auto Insurance

If your staff or volunteers use any vehicles (including their own) for your nonprofit's activities, auto liability insurance is a must. In fact, Washington State requires you to purchase a minimum amount of coverage. Insurance will pay for injuries a driver causes to other people or property while carrying out your organization's business. Your may also require additional auto insurance, including personal injury protection (PIP) and uninsured/underinsured motorist (UM/UIM) coverage. Our agents will work with you to determine what additional coverage you may need.

Product Liability Insurance

If your nonprofit sells products to the public, consider buying product liability insurance. It will protect your organization from lawsuits by customers claiming they were hurt by an unsafe or defective product you provided. If a customer breaks a tooth on a walnut shell baked into your cookie or slices a hand on a sharp-edged sculpture, this insurance will cover the legal defense and a sizable portion of the damages.

Directors and Officers Insurance

Your nonprofit's board of directors and officers could be personally named in a lawsuit against your nonprofit alleging fraud or financial mismanagement. For example, if a board member invests the nonprofit's assets unwisely and loses everything, a creditor might sue the nonprofit as well as its directors and officers. You want directors and officers (D&O) insurance to cover the cost of defending the directors and officers and pay any resulting money damages.

As with any insurance coverage, it's important to understand what kind of claims are and aren't covered by a D&O policy. Make sure your policy doesn't exclude employment-related claims, which are the most common ones filed against directors and officers.

Professional Liability Insurance

Similar to D&O coverage, this coverage (also sometimes called "errors and omissions" or "malpractice" insurance) protect against liabilities resulting from mismanagement of the organization, as well as workplace-related claims such as discrimination or sexual harassment. It covers directors and officers and staff, volunteers, as well as the nonprofit organization itself.

Nonprofit organizations do a lot to serve our community. Let one of our experienced agents work with you to help keep your philanthropic organization protected. Contact us today!

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