What Kinds of Insurance Coverage Should a Nonprofit or Volunteer-Driven Organization Have?

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, and they thus have different insurance and risk management needs.

Since each organization’s coverage needs are unique, it’s crucial to have a policy that reflects your particular risk exposures and an insurer who has access to the specific markets appropriate for your organization.  Let’s take a closer look at the most important coverages for volunteer-based organizations.

General Liability Insurance

General liability protects your organization against allegations regarding bodily injury, property damage or various kinds of personal injury arising from your premises, operations or products, if applicable.

General liability insurance is rated in different ways depending on the fit to measure your organization’s risk.  Square footage, receipts, payroll and the number of members can each be used to determine a price.  

Every organization needs a general liability policy. If your organization uses vendors or contractors, they should also provide proof of current coverage for general liability. Consider requiring that your organization be named as an “additional insured” on their general liability policy, to protect you in the event your organization is named in a suit arising from the other party’s negligence.

Volunteer Liability & Injuries 

It’s in your best interest to insure volunteers separately. Non profit volunteer insurance protects the organization’s own limits of liability in the event that a volunteer causes a claim, while closing coverage gaps. You will want to secure a nonprofit volunteer insurance program that provides up to $1 million in protection, in the event of a volunteer liability claim.

What if a volunteer becomes injured on site? State laws vary in terms of whether or not volunteers can be, or are required to be covered under workers’ compensation. Where state law doesn’t require volunteer coverage, many organizations choose to purchase an accident medical reimbursement policy to protect their volunteers in the event they are injured. You can easily secure a policy through your non profit volunteer insurance program to cover these kinds of accidents.

Directors & Officers Liability

Directors and officers of nonprofit organizations generally face the same exposures to lawsuits as corporate directors and officers.  Directors and officers can be sued for wrongful acts, or mismanagement of the organization. 

The most coommon nonprofit allegation involving board liability is employment practices, such as wrongful termination, or discrimination in hiring or promotion practices (all of which can be applied to volunteers as well). This coverage can usually be added to a directors and officers liability policy.

A  strong directors and officers liability policy will cover:

  • 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 awhile, and was caught only by accident. With the proper non profit volunteer insurance program you can safeguard your organization from these types of losses. Additional coverage is available for losses due to third party theft, and the disappearance/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. Contact us today at (800) 222-8920 today for more information on our programs and services.