Non-profit organizations are legal entities that aim to provide social benefits in some form. As a non-profit organization, you must be separate from the government and should not generate profits that provide personal benefit to any of the organization’s directors, officers, or other members.

Because you provide benefits to society, nonprofit organizations are often considered charity organizations. Under this banner, you are presumed exempt from liability exposure. However, non-profit organizations and charity organizations are not the same. Even though non-profit organizations do not intend to generate a profit, they still function much like other businesses. As such, your organization is exposed to a number of risks that can affect staff, volunteers, directors and officers, and the organization’s reputation.

In the list below, we review the common risks and exposures for non-profit organizations and also help you find ways to improve your current insurance program.

Common Exposures When Insuring Your Non-Profit Organization

Directors and Officers

Directors and officers serve on the board of your non-profit organization. These members agree to take on a large number of risks and responsibilities in the pursuit of your organization’s goals. Much like in a corporate setting, nonprofit directors and officers may receive complaints or allegations for fraudulent statements, misconduct, misuse of funds, misuse of authority, and/or endangering the organization’s mission and reputation. These risks come with being in a position of authority and should be mitigated accordingly with a D&O insurance policy.

Volunteers

Not only are non-profit organizations responsible for the actions of employees but you are also responsible for maintaining a safe working environment for the volunteers that donate their time and energy to organizational initiatives. Organizations that fail to provide such an environment are vulnerable to claims from volunteers who may seek financial compensation for damages. They are also exposed to liability from third parties whom the volunteers interact with.

Claims can arise from a volunteer if the volunteer injures themselves during work hours and sues your non-profit. A third-party claim may arise if a volunteer causes accidental property damage or injury to a third party or if they act inappropriately towards a third party while volunteering for your organization.

To protect your organization and your volunteers against injuries and property damage, you should make sure your non-profit coverage extends to volunteers as well as to employees. Not all non-profit liability insurance policies cover the actions of volunteers, so talk to your advisor to make sure this coverage is included in your policy.

Sexual Assault and False Allegations

Having volunteers of all ages and unsupervised interaction between minors and adults leaves non-profit organizations vulnerable to allegations of sexual assault. Volunteers are constantly in contact with each other, and minors interact frequently with adults such as coaches, parents, and facilitators through events like organized overnight trips. As a result, sexual assault or false allegations of sexual assault do happen. These types of scandals can have serious financial consequences for a non-profit organization, so consider purchasing coverage to protect your organization in the event of a lawsuit.

Property

A business, both standard and non-profit, cannot exist without a physical location. It may be an office, a member’s home, or a space that your organization rents. Whatever the case is, having property involved in operations exposes your non-profit to property risks such as theft, vandalism, fire, earthquake, floods, and more. With the restricted funds available to non-profits in the case of an emergency, one of these disasters could leave your organization in financial ruin. A non-profit liability policy will protect the property of your organization if one of these unforeseen circumstances should occur.

Professional Liability

Professional Liability, also known as errors and omissions, is best explained as the liability risks that arise from providing professional services, such as counseling and training. A professional liability insurance policy provides protection against the scope of risks that any professional who offers advice or services under the banner of your non-profit might face. They might include poor advice, mistakes in services rendered, negligence, and failure to deliver on promises. Litigation for a professional mistake on the part of one of your employees can be costly, especially for non-profit organizations, with severe financial and reputational harm. The professional liability component of your insurance policy protects your organization from bearing the full legal cost of defending against these claims and settlement costs.

Cybercrime

Almost every business has a computer network, and your non-profit is likely no exception. With the advanced technology that facilitates everyday work, confidential information is handled digitally every second of the day. This kind of exposure has made non-profit organizations more vulnerable to data breaches than ever before. As a non-profit organization, you typically collect and store personal information from clients and volunteers. If the confidentiality of this information is breached by a cybercriminal, the organization may be sued for damages by those whose data was disclosed. The cyber component of your insurance policy ensures your organization will not suffer financial losses as a result of such a breach.

Automobile

Transportation in your non-profit organization is inevitable, whether it is for travel, delivery or completing day-to-day tasks. Many non-profit organizations own a vehicle and rely on volunteer drivers to help fulfill the demands of their programs and services. However, roads are dangerous, and accidents happen every day. One of the biggest concerns of non-profit organizations is putting their volunteers behind the wheel because improper use of the vehicle can easily lead to an accident and result in hefty claims. Check with your advisor to ensure you have an automobile liability component included in your non-profit insurance policy.

Employer’s Liability Insurance

From small accidents to serious ones, a non-profit organization’s work environment is a constant liability. Every employee and volunteer is vulnerable each day to injuring themselves while working. If the organization is not insured, this could mean liability for medical bills and lost wages as a result of the incident. You could end up paying exorbitant legal fees, even if not found liable for damages. Employer’s liability insurance helps pay for attorney’s fees, court costs, and settlements and judgments related to these workplace accidents.

Reduce Your Risk with Comprehensive Liability Insurance

These liability exposures can be significant for non-profit organizations because non-profits typically do not have the excess funds to satisfy a lawsuit. Because of this, it’s important for your organization to protect and secure yourselves against potential liabilities.

A comprehensive liability insurance policy is an ideal solution for non-profit organizations because it protects you from all angles. While proper risk management practices can reduce certain exposures, no system is 100 percent effective to ensure incident-free operations. If you are a part of a non-profit organization, connect with us to begin reducing your risk.