What Kinds of Insurance Coverage Should a Nonprofit or Volunteer-Driven Organization Have?
There are important guidelines for nonprofit organizations to follow to carry out their mission without creating further risks for themselves. Just as businesses need insurance to protect their employees, operations and bottom line, so do nonprofits. However, nonprofits and volunteer-driven organizations do not function quite like traditional businesses, so they require different insurance services and experience specialized risk management needs.
Since each organization’s specific coverage needs are unique, it’s crucial to have an insurance policy that reflects your particular set of risk exposures and an insurer who has access to the insurance affiliates appropriate for your organization. Let’s take a closer look at the most important insurance products that provide coverage for volunteer-based organizations.
General Nonprofit Liability Insurance
General liability insurance coverage guards your nonprofit against charges that your procedures, activities, property or any products caused other parties to suffer property damage, bodily injury or personal injury.
The rating of your general liability protection is usually contingent on the fit most appropriate for determining the risk your organization presents. This may include such information as your payroll, membership, square footage or annual receipts used to calculate the prices of insurance policies.
Like all volunteer-based organizations, you need general or professional liability insurance. You should also verify that any contractors or various vendors that your nonprofit utilizes produce proof of current injury or property damage coverage for general liability. Requiring them to add your nonprofit on their general liability policy as an additional insured also protects you if their negligence results in a lawsuit that includes your organization.
Volunteer Liability Insurance and Injuries
Many of the individuals who supply a volunteer service for your organization or participate in volunteer activities that your nonprofit sponsors may already have some personal liability insurance through their homeowners’ policies or renters’ insurance coverage.
Homeowners Insurance Coverage
Most homeowners insurance provides some liability coverage for a claim filed for bodily injury or property damage for which the policyholder and covered family members are responsible. This includes incidents that happen on property other than the homeowners’ insurance coverage address.
Volunteer’s Personal Auto Insurance
Additional protection may also come through the volunteer’s own auto liability coverage if a personal vehicle is used while carrying out volunteer functions for your nonprofit. This might include transporting young people to your organization’s social events or taking clients with disabilities to training sessions. While such policies provide some liability insurance, they may not have high enough limits in case of an accident.
Need To Check Coverage and Policy Eligibility
For the sake of the individual volunteers, as well as to protect your nonprofit, persons who donate time to your organization should check with their insurance agent to find out exactly what coverage they have through their homeowners or auto liability policies. Insurance services professionals can provide details on exactly what the policies cover. The information disclosed can help your organization evaluate the additional volunteer liability insurance needed.
Benefits of Volunteer Liability Insurance
It’s in your best interest to get a separate public liability insurance policy for volunteer workers. Nonprofit volunteer insurance protects the organization’s liability limits already in place and can cover volunteers caught in situations where a claim may allege negligence against them during the performance of volunteer service. Volunteer insurance can also help close coverage gaps. You will want to secure a nonprofit volunteer insurance program that provides up to $1 million protection if a volunteer liability claim results from failure to use reasonable care during the volunteer’s professional services or volunteer activities.
Nonprofits that utilize volunteer service providers or other persons donating labor may also want to consider excess auto liability coverage. This can protect the organization for claims purposes when individuals who use their own vehicles during their volunteer service are involved in an accident that exceeds amounts greater than the volunteer’s personal auto liability limits.
Role of Workers’ Compensation
What if a volunteer sustains some type of accident or injury on-site? Each state has different laws determining whether volunteers are included under the workers’ compensation laws or whether organizations must cover them under their workers’ compensation insurance policy. In states where the law doesn’t require volunteer coverage, many nonprofits choose to purchase an accident medical reimbursement policy to protect their volunteers if they are injured while performing volunteer work. You can easily secure a policy through a nonprofit volunteer insurance company to cover these kinds of personal injury accidents.
Directors & Officers Liability Insurance (D&O)
Those who serve a nonprofit organization as directors or officers generally face the same lawsuit exposures as their corporate counterparts. Directors and officers can be sued for wrongful acts, failure to properly oversee the organization or neglect of fiduciary duty. This is why it is recommended to include D&O Insurance for nonprofits in your coverage strategy.
The most common nonprofit allegation involving volunteer board members’ liability includes the improper carrying out of employment procedures, such as wrongful termination, discrimination when hiring or promoting individuals — all of which can be applied to volunteers as well — or violating someone’s civil rights. In most cases, protection against these accusations can be added to a D&O liability policy.
A strong nonprofit D&O liability policy covers:
- Accusations that may include wrongful termination
- Failure to follow proper hiring and promoting procedures; gross negligence with the application process; and discrimination or harassment
- Accusations that severe mental suffering and emotional anxiety resulted
And other claims relating to:
- Slander, misrepresentation, defamation or libel
- Invasion of privacy
- Certain personal data disclosed
- Illegal entry or unlawful eviction
- False arrest or imprisonment
- Malicious prosecution
- Trademark or copyright infringements or other unapproved uses of the title
- Plagiarism or any dishonest or inappropriate use of ideas on third party websites
- Allegations such as wrongful termination
- Failure to hire or promote; discrimination (i.e. sexual harassment)
- Claims alleging mental anguish and emotional distress
And other claims relating to:
- Libel, slander or defamation
- Invasion of privacy
- Wrongful entry or eviction
- False arrest or imprisonment
- Malicious prosecution
- Infringement of copyright, or trademark or other unauthorized use of title
- Plagiarism or other misappropriation of ideas
Volunteer Dishonesty
Every organization must consider the unfortunate event of a volunteer or employee performing embezzlement, forgery or stealing from the organization in some way.
Claim reports on these situations normally show evidence that the dishonest individual was never suspected, hid the act for quite a while and was caught only by accident. With the proper nonprofit volunteer insurance program, you can safeguard your organization from these types of financial losses. Additional coverage is available for losses due to third-party theft and the disappearance or destruction of funds.
About VIS
Volunteers Insurance Service Association, Inc. (VIS) was established in 1972 for the purpose of providing insurance and risk management services for volunteer-based organizations. In addition to still providing these insurance services today on a nationwide scale, we have expanded to provide noninsurance resources for members to manage their risks and improve their operations. By transferring the volunteer risk exposure to our program, we can help you protect your organization and utilize our nonprofit risk management center. Contact us today at (800) 222-8920 today for more information on our programs and services. Or, learn more about VIS Member benefits.
