Nonprofit Insurance Program

Charity Insurance: DO Nonprofits really need it?

By Alexa Connelly
September 22, 2013

Non profit charities are the heart and soul of communities throughout the United States. Their commitment to provide communities in distress with financial and physical relief is untiring. As much good as nonprofit charities do, they still operate under a microscope.

Your Charity Organization Cannot Afford to Operate without Insurance!

Imagine being accused of divulging privileged information, or questioning a volunteer about his or her religious beliefs. These incidents may be purely innocent, but the person you questioned, might think otherwise. The most common mistake charities make, is to assume they are exempt from lawsuits.

Do not operate your organization without charity insurance. Chances are you have worked for months or even years to build your organization, and one day it is gone. Sometimes the very people you want to help are the people who want to sue you. Protect your organization’s good name, your reputation, and the services you provide, with insurance.

Your organization is not immune from lawsuits. Unless your organization is in Delaware, Colorado or Alabama your organization is not protected from the by the state model statues, which provide liability coverage to volunteers and officers and directors. If your state allows you to purchase charity insurance, you should do so, with extreme caution. Make sure you buy enough coverage to protect your organization from loss.

Ask yourself this question, if the answer is “no”, you will know exactly what you need to do. “If my organization is sued, are there adequate resources to pay for an attorney and keep the doors open?” The survival of your organization depends on how well you protect the structure of your business, your volunteers, and your staff. You should look into getting separate insurance policies, if your organization functions through volunteer programs. A generic insurance policy might not be sufficient. Worker compensation insurance is another form of protection your organization need, in the event of an accident.

Here are a few insurance terms you need to get familiar with:

  • D&O policies are referred to as Directors and officers insurance. Offer limited protection to D&O members and the organization.
  • Endorsements will allow you to modify an existing policy. You can add or remove what you need or do not need in your insurance contract.
  • General liability covers bodily injuries, and property damage, pertaining to the premises.

Your organization cannot afford to operate without charity insurance. Protect your organization.

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