Insurance For Non-Profit Organizations

Insurance Policies to Consider For Non-Profit Organizations

1. Medical Coverage

When it comes to insurance, health insurance is often the first thing that comes to mind.

47% of charities offer health insurance with less than 50 workers (two-thirds of all NGOs). Health insurance may appear expensive, but it is critical for overall employee retention and work happiness. It is more difficult to quit a job that provides good health insurance.

When considering the long run, the cost to replace an employee is equal to 20% of their annual income. This cost is more than the company’s possible contribution of up to 80% of an employee’s health premium.

The Affordable Care Act (ACA) penalizes businesses with more than 50 full-time workers but does not offer health insurance alternatives. The Affordable Care Act (ACA) now provides a Small Business Health Options Program (SHOP) for organizations and small enterprises with fewer than 50 full-time workers.

2. General Liability Insurance

Non-profits need general liability insurance, sometimes known as “commercial general liability.” For many operations, non-profits depend on volunteers and merchants. The organization may accommodate tens of volunteers and a few vendors, and hundreds of guests during a single event.

This flood of visitors on a non-profit’s premises or at an off-site location raises the likelihood of something going wrong. In the event of accidents or damage, general liability insurance covers the organization.

3. Commercial Property Insurance

Property insurance is not required for all charities, and whether you own or rent, it may provide valuable protection in the event of natural or man-made calamities. Ensure the property insurance covers more than the land and structure when shopping for coverage.

Small finances continue to be a reality for non-profits. It’s critical to choose insurance that doesn’t merely reimburse market value in the event of a catastrophe that damages the accessories and equipment that a charity depends on.

Non-profits require insurance plans to cover the expense of replacing goods such as equipment or machinery, fixtures, computers, office furniture, inventories, and supplies following a disaster.

4. Commerical Auto Coverage

Automobile insurance is regularly overlooked insurance for charities, but you are responsible if your volunteers or employees use a car for any charitable function. This covers their own vehicle.

Insurance coverage is essential if the organization owns a car. Even so, knowing about an employee’s or volunteer’s coverage for personal insurance is vital when they drive their own automobile for a charity activity.

5. Directors and Officers Insurance and Professional Liability Insurance

Omissions and error insurance, sometimes known as “malpractice” insurance, is a kind of professional liability insurance. Malpractice insurance may conjure up images of physicians and attorneys, but it may be just as beneficial to organizations. Non-profit directors, officials, employees, and volunteers may engage in or be accused of improper conduct at times. Your organization is at legal risk in these situations. In these situations, professional liability insurance covers board members, non-profit directors, volunteers, employees, and the institution itself.

Another kind of security for charity executives is directors and officers (D&O) insurance. It is often considered that bigger organizations need it, but NGOs also require it.

Non-profits made up 58% of the 31% of firms with a D&O claim against them. In these situations, the average claim was approximately $35,000, with one in every ten claims exceeding $100,000.

D&O insurance covers against any real or claimed omission, act, mistake, misrepresentation, misleading statement, breach of duty, or negligence, by the insured person. It also includes employee difficulties, such as wrongful termination, discrimination, failure to perform services, harassment, and asset mismanagement.

Since charities pay lower salaries and rely heavily on getting volunteers, the likelihood of choosing an officer or board member without any prior leadership experience is considerable. Most organizations operate in a relaxed setting, which enables mismanagement. 

The Volunteer Protection Act was enacted to safeguard volunteers against injury claims if they did not get any income other than a refund for whatever money they might have paid out of their own pockets. The Volunteer Protection Act doesn’t cover incidents of mismanagement, and it does not pay the costs of defending individuals who are sued. In the case of a lawsuit, D&O insurance protects an individual’s assets for officers, corporate directors, and their spouses, as well as the organization as a whole.

6. Products Liability Insurance

To supplement their funding, several NGOs offer merchandise. In reality, this cash stream is the most effective way to create a long-term organization. 

If the company sells any items, product liability insurance is a must. Non-profit insurance can protect you against claims from clients who claim to have been injured by a product, irrespective of company size or cost. If you are judged to be at fault, product liability insurance will cover your legal defense as well as a major percentage of the damages.

7. Crime Insurance

Other types of insurance coverage, including crime bonds or crime coverage, are less well-known. No one likes to think about that now, but organizations are vulnerable to unethical individuals when they interact with huge groups of people. When a charity loses money due to crime and employee theft, coverage covers the funds lost and helps prevent situations like this from arising at all.
 

Donors may rest easy knowing that their money is protected with this form of charity insurance. Before giving funding, most foundations and municipal contracts demand verification of coverage.

8. Cyber Liability

Cyber-theft tales have hit the news regularly. These tales are driven by people’s dread of their own money. Although it may not be at the forefront of non-profits’ concerns, some non-profits are more vulnerable to cybercrime than you would believe.

Donors provide non-profits with large volumes of sensitive information. The dates and amounts of donations and a mechanism to contact the contributor must be included in any donor databases. Additional information will be collected in a valuable database, such as the family members’ names, the donor’s personal hobbies, birthdays, and data on other organizations donors support.

This data is a gold mine for cybercriminals and bad news for prospective contributors concerned about security.

Online liability protects your organization and the donations against cyber theft and may provide the donors with peace of mind.

Now that you know what insurance is needed for non-profit organizations hire an expert to design your insurance plan.