Five Types of Insurance -- Is Your Not-for-Profit Covered?

Many not-for-profit boards of directors include individuals that may not have much exposure to running a business and may not be familiar with the types of insurance coverage available to the organization they represent.  Adequate insurance coverage is important in order to protect the not-for-profit’s people and property so that it can avoid major disruptions to its operations and continue its intended mission.  Below are a few types of insurance coverages along with descriptions. 

1. General Liability Insurance General liability insurance covers bodily injury or property damage claims.  With this coverage, your not-for-profit will be covered for damages that it has to pay to individuals injured on the not-for-profit’s property.  General liability insurance doesn’t cover employees as they would be covered under a separate workers’ compensation insurance policy.
2. Property Insurance Property insurance can cover property such as furniture, equipment, computers, and buildings that are either owned or rented.  If there is valuable property that is necessary in order for the not-for-profit to fulfill its mission, that property should be covered under a property insurance policy.  Make sure the policy covers the cost to actually replace property that is lost or damaged.
3. Directors and Officers (D&O) Insurance D&O is insurance coverage for a not-for-profit’s board of directors and officers, who are most often volunteers of the not-for-profit, against any lawsuits brought against them for “wrongful acts,” such as allegations of financial mismanagement and fraud.  It is important to understand what kind of wrongful acts your not-for-profit’s D&O policy covers and the exclusions that are not covered. 
4. Auto Insurance Auto liability insurance is a must even if your not-for-profit doesn’t own a vehicle.  Auto liability insurance will provide some protection for the not-for-profit staff or volunteers who use their own vehicles for activities, such as transporting clients. 
5. Workers’ Compensation Insurance When a not-for-profit organization has employees, workers’ compensation insurance is necessary in order to protect those employees.  Workers’ comp pays medical expenses, disability, and death benefits for employees that get injured on the job.  Be sure to investigate what your state’s workers’ comp requirements are, as laws vary from state to state.

It is important to engage an insurance professional to fully understand each form of insurance available and ensure your not-for-profit has proper insurance policies in place.