Whether you’re your non-profit has existed for years or recently established, you may have questions about insurance needs. For starters: What kind do you need? How much? Are you required by your state or by grantmakers to carry certain coverage?
Much depends on your organization’s size, scope, and programming. However, your goal should be to meet required regulatory or funding mandates and to address legitimate risks your non-profit might encounter. Although there are many types of insurance available to non-profits, it’s unlikely you need all of them.
One type of insurance you do need is a general liability policy for accidents and injuries suffered on your property by clients, volunteers, suppliers, visitors, and anyone other than employees. Your state also likely mandates unemployment insurance as well as workers’ compensation coverage.
Property insurance that covers theft and damage to your buildings, furniture, fixtures, supplies, and other physical assets is essential, too. When buying a property insurance policy, make sure it covers the replacement cost of assets, rather than their current market value (which is likely to be much lower).
Depending on your non-profit’s operations and assets, you might want to consider such optional policies as automobile, product liability, fraud/employee dishonesty, business interruption, umbrella coverage, and directors and officers liability. Insurance also is available to cover risks associated with special events. Before purchasing a separate policy, however, check whether your non-profit’s general liability insurance extends to special events.
Because you’re likely to be working with a limited budget, prioritize the risks that pose the greatest threats. Then discuss with your financial and insurance advisors the kinds — and amounts — of coverage that will mitigate those risks.
Be careful you don’t assume insurance alone will address your non-profit’s exposure. Your objective should be to never actually need insurance benefits. To that end, put in place internal controls and other risk-avoidance policies such as new employee orientations and ongoing training.
Don’t Go Overboard
Some organizations buy more insurance coverage than they need, which can be costly. So, make sure you’ve thoroughly analyzed your non-profit’s risks and buy only what’s necessary to protect people and assets.