August 25, 2017
One of the most important steps in running a successful nonprofit is buying the right insurance. No two nonprofit organizations are the same. Some nonprofits have a mission to raise money for services or individuals in need and others stay active in their community by attending events and delivering services in person. The services you provide as a nonprofit arts and culture organization are unique. Finding insurance that meets your needs and protects your organization can be difficult.
Here are top five types of insurance you need to have to insure and protect your nonprofit arts and culture organization properly.
- General Liability. General liability insurance protects your nonprofit when you are held responsible for an injury to another party. An example would be if an attendee at one of your performances slips and falls injuring themselves. The general liability policy will pay their medical expenses. It will also pay costs associated with a lawsuit the individual files claiming pain and suffering and lost wages for their time off of work.
- Molestation and Abuse Liability. Many arts and culture nonprofits work directly with children, so it is vital that your insurance includes protection against molestation and abuse allegations. Even though you do your best to properly screen volunteers, there is potential for a lawsuit. In one case, parents sued the nonprofit organization because a choir director touched their daughter during a rehearsal.
- Coverage for Traveling Property. If you are a performing arts organization, you might travel to do performances. There is a lot of equipment, props, and instruments needed to pull off a successful event. If any of the property is stolen or damaged during travels, you need a special type of insurance to cover replacement costs. This is referred to as Inland Marine coverage.
- Director’s & Officer’s. A board of directors is responsible for the important business decisions of your nonprofit. They often allocate money to different programs, oversee new program ideas, and vote on pressing matters. When donors generously contribute funds for special projects like building improvements or new programs, they expect their money will go directly to the cause. What happens if the board decides to use the money for an expansion or to replace broken theater equipment, and the donor files a lawsuit? Directors and officers insurance will pay the costs to defend, settle, and recoup the money to the donor.
- Commercial Property. Most people think property insurance is only needed in the event of a fire. It also provides coverage in other unexpected events like pipes bursting or theft. If your museum, library, theater, or art gallery experiences burst pipes or theft that causes canceled performances or shows, you will need to reimburse patrons. Most nonprofits cannot afford that extra expense. In addition to paying to replace damaged or stolen property, the best commercial property policies include coverage for loss of income and reimbursement expenses.
One thing to remember in the insurance process is to always look for an agent that specializes in helping nonprofits just like you. They are more likely to understand your services and what makes you different from other nonprofits.