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Huge Opportunities in the Nonprofit Sector

of the nation’s workforce is nonprofit employees

Nonprofits don’t run on the power of volunteers and charitable donations alone. The National Council of Nonprofits reports that 13.7 million Americans work in the nonprofit sector, mostly for small- and mid-sized organizations. But their focus on the greater good doesn't shield them from risk. Like any other business, nonprofits can be sued over breaches of contract, personal injuries, and employment issues. And if a nonprofit isn't incorporated, its employees’ personal assets can be targeted. Incorporated or not, nonprofit groups need Errors & Omissions and Employment Practices Liability Insurance.

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Important Insurance Policies for Non-Profit & Social Service Organizations

The non-profit sector focuses on working for the greater good, but they still face risks unique to their profession. In fact, the broad range of service organizations included the non-profit category means you'll need to investigate a variety of potential exposures to identify the right coverage for your client.

Nonprofits and social service agencies provide all kinds of help to all kinds of people. But having so many board members, employees, and volunteers fighting the good fight exposes your client's NPO to risks. These are some of the policies your client should consider to address those vulnerabilities:

General Liability Insurance

General Liability Insurance provides protection in a lawsuit where a third party claims your client did something that either caused a bodily injury or property damage. "Third party" refers to someone other than the insured, such as a volunteer or donor. For example, if a volunteer suffers a burn while assisting in your client's soup kitchen, General Liability might pay for their immediate medical expenses. If the volunteer sues, GL covers your client's legal fees.

Professional Liability / Errors & Omissions (E&O) Insurance

Some NPOs, such as caregivers or suicide hotlines, provide professional services to their community. Professional Liability Insurance, also called Errors and Omissions Insurance, protects your client if they're hit with a lawsuit over the "substandard" work they did. So if your client, a debt counselor, is sued for allegedly giving poor advice, E & O pays for litigation costs. Even if the suit is meritless, this policy can cover attorney fees, witness fees, and settlements or judgments (up to policy limits).

Property Insurance / Business Owner's Policy (BOP)

A nonprofit might have an array of equipment that is essential to fulfilling their organizational mission, such as a community youth center. They might have gym and recreational equipment, computers and classroom furniture, woodworking and automotive tools, plus the regular office equipment that keeps their services running. Property Insurance can cover repair or replacement costs if these assets are damaged or destroyed in certain events (e.g., fires, windstorms, or theft). If your client's organization qualifies, they could bundle their Property Insurance with the General Liability through a Business Owner's Policy, or BOP . A BOP is a convenient way to get affordable coverage.

Workers' Compensation

Some NPOs have employees and volunteers working in an office while others are out in the field. Either location could be the site of an on-the-job illness or injury, which makes Workers' Compensation Insurance an important policy for your client. Workers' Comp covers work-injured employees' medical costs and lost wages when they are unable to work. Also, Workers' Compensation can cover your client's legal expenses if their employee decides to sue over the injury.

Directors and Officers (D&O) Insurance

Nonprofit directors and board members encounter greater scrutiny than their for-profit counterparts when it comes to financial decisions. Directors and Officers (D&O) Insurance protects your client's executives from claims that they mismanaged funds, mistreated an employee, or failed to perform their official duties. Without this coverage, your client's directors, officers, and board members can be held personally responsible for the financial aftermath of these lawsuits.

Tips for Covering Nonprofits and Social Services

One aspect of the nonprofit world that needs consideration from you is special events. Nonprofits routinely host ceremonies, parties, and open houses to draw attention to their cause. And while the events are necessary to raise funds, they also increase the organization's risk.

If your nonprofit clients hosts fundraisers, they may need to add Special Event Insurance to their risk management portfolio. A Special Event policy may protect your client if..

They have to cancel or postpone a fundraiser.

An employee damages the venue's property.

An attendee suffers an injury.

Most importantly, if your client's fundraiser includes alcohol, they need a policy that covers them in case an intoxicated donor causes trouble. Some Special Event Insurance includes Host Liquor Liability, but not all policies do. And if your client charges for alcohol, they may need Liquor Liability instead. Find out what kind of events your client hosts and be sure to match the coverage appropriately.

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