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.
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.