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Nonprofit Insurance: Facts to Consider

By Heather Brown
January 06, 2017

Shopping for insurance for your nonprofit is not something most directors think is enjoyable. Insurance is confusing. Most of the time insurance agents don’t fully understand your services, mission, or vision making it difficult to properly identify your needs. Take the time to get a basic understanding of insurance and facts you need to consider before starting your nonprofit insurance shopping experience.

Insurance for Nonprofits

A number of nonprofits choose to skip purchasing insurance claiming the cost is too high and the amount of work involved is too time-consuming. Insurance for your nonprofit is more valuable than you realize. It’s the only way you can afford to protect your mission, services, and board members in the event of an accident or lawsuit.

Your nonprofit organization is unique in the services your offer and the daily activities you perform to keep operations running smoothly. Insurance for your nonprofit shouldn’t be a roadblock that brings your organization to a screeching halt tying up your minimal free time. Nonprofits that make it through the purchase experience rely on an insurance agent that specializes in nonprofits and treats them like a partner throughout the entire process.

Things You Need to Know

Here are five things you need to know and understand about nonprofit insurance before you start working with an insurance agent.

  1. Nonprofits can be sued. There is a common misconception that nonprofit organizations cannot be sued due to charitable immunity or special state laws. Charitable immunity is a concept long gone and forgotten about by our legal system. Nonprofits receive lawsuit papers every day sometimes for honest mistakes and others due to poor management decisions. No matter what, it is vital you make the choice to protect your nonprofit’s future with specialized insurance.
  2. Nonprofits need multiple insurance policies. There is no one size fits all insurance policy that nonprofits can purchase. Every organization is different and your needs need to be assessed individually. General liability, professional liability, directors and officer’s liability, employment practices liability, cyber liability, and hired and non-owned auto are just a few types of policies you need to consider.
  3. You get what you pay for. It is tempting to make a decision based on price only. Premium costs are not a cheap expense for nonprofit organizations. Making your choice based on price alone typically means you are purchasing bare-bones insurance that provides protection on minimal incidents. Ask your agent to review what is specifically not covered by the policy they offer. Make a choice based on protection for your organization and volunteers instead of on price.
  4. Risks management is not bad. When you start talking to insurance agents, they tend to talk about risk management. Risk management is not a bad thing and they are not trying to accuse you of operating in an unsafe manner. The fact is risks are everywhere, including in your organization. A responsible insurance agent helps you identify these risks and offers solutions to minimize injury and backlash from the community. Be open to their suggestions as a third party. Successful risk management programs often lead to long-term savings on your insurance premiums.
  5. You can simplify the process. Before you contact insurance agents, make a list of all the services you offer. Include specific details about events, activities, fundraisers and who you help and how. The more detailed the list, the better the insurance agents will understand your mission. Having a complete understanding is the only way they can successfully find your insurance that protects your nonprofit.

Stop avoiding shopping for insurance. It doesn’t have to be a dreadful process. Take your time to research and find an insurance agent that specializes in working with nonprofit organizations like yours.

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