There is an overwhelming about of insurance coverages available on the market. Navigating your way through insurance terms and jargon is not a great way for a new nonprofit direct to spend their time. That’s why we have put together this list of core coverages for a start-up social service organization to consider.
General Liability Insurance
Why – If your organization is operating anywhere other than your home, then the venues that you secure to host your event, raise funds or operate out of will want to make sure that their assets are protected. Aside from venues, many funders and government agencies will require that your organization have an insurance policy that will not only insurance you, but their interests as well. The number one coverage that is required is General Liability. The most common lawsuits covered by General Liability are slips and falls. Other claims that are addressed by General Liability are personal and product injuries as well as damage to premises that are rented to you.
PRO-TIP! – If you are aware of any venues, funders, landlords or entities that require a certificate of insurance and to be named as Additional Insured, make sure that you request to add their names to your insurance policy up-front to avoid a mid-term additional premium. Always ask if the company they are quoting with charges for special events and additional insureds.
Directors & Officers Liability
Why – Most Nonprofit & Social Service Organizations are run by a board of directors. The board of directors purpose is to help your organization operate to its greatest potential. The board will help your organization raise funds and make great decisions. However, there is a risk of being on a board of directors, they can be personally named in a lawsuit, putting their personal assets as risk. Many movers and shakers are aware of this risk and will only join boards that have Directors & Officers Liability. Protect your board by placing this coverage as soon as possible.
PRO-TIP! – Directors & Officers Liability often has Employment Practices Liability built into it. Employment Practices Liability is valuable for organizations that have employees. Unlike Workers Comp, it does not cover inquires to employees, it covers the organization for employee related lawsuits such as discrimination, wrongful termination and harassment. If your organization does not have employees, then ask your broker to explore options for D&O only, without employment practices to save a few bucks. Keep in mind however, sometimes; this coverage is extended to volunteer related claims and this coverage may still be relevant to your organization.
Why – It is the law to provide employees with coverage for workplace injuries. Make sure you have coverage in place as soon as they are hired
PRO-TIP! – Workers Compensation is rated off payroll and audited by the insurance company on an annual basis. Consult with your broker on the many ways to avoid paying additional premium at the end of the year!
This was a small list of the MOST important insurance coverages to have for a new organization. Keep in mind that General Liability does not cover EVERYTHING. Ignorance is not bliss when a claim occurs and you come to find out that your property, professional exposures, abuse and molestation, earthquake, money, and securities were not covered. Consult with an insurance professional to find out the most important coverages to protect your mission.