Nonprofit Insurance Services

How Does Workers Comp Insurance Work for Nonprofit Organizations?

By Alexa Connelly
August 24, 2018

Nonprofit organizations deliver a great value to their local communities thanks to countless volunteers and community support. As a nonprofit director, you not only believe in your mission, you carry out the necessary tasks to keep that mission alive and believe in your volunteer team. It is also your responsibility to make sure the nonprofit and your volunteers are protected by choosing the right insurance.


General liability insurance, property insurance, director’s and officer’s insurance, and volunteer accident and health insurance are the types of insurance most look at first. Workers’ compensation is another insurance that you may need to consider.


What is Workers’ Comp?

Workers’ compensation insurance pays medical expenses and lost wages for employees that are injured or become ill while working.  Covered injuries and illnesses can occur onsite, while running an errand, or while attending an event on behalf of an organization. Workers’ compensation requirements vary depending on the state, but protect organizations from being sued by an injured employee.


Why Would a Nonprofit Need Workers’ Comp?

Many nonprofits assume since they are a nonprofit, they don’t need to buy workers’ compensation insurance. Before you make this decision, answer these questions:


  1. Do you have employees?


While most nonprofits rely on unpaid volunteers, some larger nonprofits also have employees on staff. Check your state regulations to see if you are required to carry the coverage. Some states require it with just one employee and others require it once you have three paid employees.

Even if you fall below the state requirements, you should consider having workers’ compensation insurance. Without it, employees can file a lawsuit against the nonprofit to recoup medical expenses, lost wages, and more. When you have workers’ compensation in place, they are no longer able to sue you if they want to receive benefits.


  1. Do you have volunteers?


While workers’ compensation benefits are for employees, there are some cases where unpaid volunteers fall into an employee category. If a volunteer is receiving any type of benefit in return for their hours including a discount, living allowance, or gift certificates, some states will consider them employees.  Some states categorize volunteers as employees if they have to work an assigned schedule or clock in and out to track their hours.


Committing money to the right programs and expenses can be a challenging balancing act, especially for nonprofits. It is vital that you don’t skimp on protecting your nonprofit with the right insurance. Contact a trusted insurance agent today to discuss your nonprofit’s insurance needs and  if workers’ compensation is necessary.

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