Because operating budgets are always tight, managers at nonprofits must construct their insurance programs so that “need to have” coverage is always in place, and “nice to have” coverage added as circumstances permit. Here is a guide to nonprofit insurance requirements; what is needed and what is a luxury.
Need-to-Have Volunteer Insurance Coverages
Responsible nonprofit organizations must have insurance policies designed to cover critical aspects of the operation, including the organization itself, its physical assets, its managers and directors, and its volunteer workforce. Need-to-have insurance includes:
Directors & Officers (D&O) Liability Insurance – Your directors and officers can be sued for a variety of reasons, including wrongful acts and or mismanagement of the organization and/or its resources. D&O insurance protects them from the loss of personal assets, and helps attract and retain top talent. Typically, D&O insurance coverage has a $1,000,000 liability limit, but higher limits are available from VIS.
General Liability Insurance – No matter how safety-conscious you are, your volunteers (and paid staff, if you have them) can injure others, or damage someone’s property. General liability insurance protects the organization and its employees against bodily injury and property damage claims as well as “personal injury” such as libel or slander. We recommend that nonprofits obtain general liability policies with limits not less than $1,000,000 per occurrence and $2,000,000 aggregate, and a separate policy to cover the liability exposure of volunteers. (A separate policy for volunteers protects them while preserving the organization’s own liability limits and claims experience.)
Auto Liability Insurance – General liability policies don’t cover property damage or bodily injury caused by vehicles. Your volunteers — and employees, if any — may use their vehicles on their assignments, so it’s important to protect your organization from this risk. If your organization doesn’t own vehicles, you can obtain what’s called hired and non-owned auto coverage. Hired would be a rental car. Non-owned would be the vehicles of your employees or volunteers when they are using them in their assignments. This can be a separate policy, or it can be added to a general liability policy. We recommend a limit of not less than $1,000,000.
This coverage protects the organization. However, volunteers often are concerned about their own liability, especially if they transport clients. Offering volunteer excess auto liability coverage can satisfy those concerns. This coverage sits over the volunteer’s personal auto liability coverage.
Workers’ Compensation Insurance – If you have employees, your state probably requires that you carry workers’ compensation insurance, for job-related injuries. Premiums vary according to total payroll and loss experience. Sometimes volunteers can be covered under workers’ compensation, but even if your state will allow it, we recommend you cover them separately. Volunteer accident coverage pays in excess of your volunteers’ other insurance (if any), and is much less expensive than workers’ compensation.
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Nice-to-Have Insurance Coverages
If you own or lease an office, you will need to cover your property. (The lease might require it.) Furniture, computers, phones and other equipment can be expensive to replace if they are damaged or destroyed. Property insurance is readily available; premiums vary based on the value of what is covered.
While we might never think that our employees or volunteers would be dishonest, things happen sometimes. Crime coverage makes the organization whole if theft occurs. Coverage can be limited to the premises or can include losses off-premises. You can cover the assets of others, such as clients. The VIS crime policy starts at a little more than $200 and is based upon the number of volunteers and employees.
If you collect personal information, you have cyber liability exposure. Even though your organization might not be a high-profile target for hackers, information can be released accidentally, or intentionally by a disgruntled employee or volunteer. The more information that you have, the higher your risk. Cyber liability coverage helps pay expenses you would incur should there be a breach. Pricing and coverage vary greatly.
If you have employees, risks include failure to hire, failure to promote, wrongful termination, sexual harassment, discrimination…the list goes on. For nonprofits, the coverage can be endorsed onto a directors and officers liability policy for about $200.
Have the right agent or broker — Because every organization’s needs are a little different, it’s important that you work with an agent or broker who understands nonprofit organizations, and can place coverage with appropriate insurance companies. Unfortunately, most agents (and companies, for that matter) do not specialize in nonprofits. If you need help identifying an agent who’s an exception, please contact us at firstname.lastname@example.org, or 800.222.8920.
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. Contact us today at (800) 222-8920 for more information on our programs and services. Join now for just over $2 per month!
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