What is

Insurance

Insurance provides financial protection for nonprofits against risks such as property damage, liability claims, or employee-related incidents, ensuring organizational stability and continuity. As with any business, nonprofits should mitigate risk by having the required insurance coverages. One activity that is unique to nonprofits is Directors and Officers (D&O) insurance, which covers the board of directors and volunteers. Nonprofit insurance is different from business insurance. While the names and general coverages may be the same, nonprofit insurance will have specific policy language and endorsements that make it more applicable to a nonprofit organization.

Why It Matters

Insurance is crucial for nonprofits to mitigate risks and safeguard their assets, staff, and beneficiaries. From liability coverage for volunteers to protection against property damage or cyberattacks, having the right policies ensures the organization can continue its mission without financial devastation from unforeseen events. Many funders and regulatory bodies also require nonprofits to carry specific types of insurance to remain compliant with coverage minimums. Most insurance providers offer all the insurance needs but be sure they cover the basic activities below.

Types of Insurance for Nonprofits

General Liability Insurance: Protects against claims of bodily injury or property damage during nonprofit operations.
Directors and Officers (D&O) Insurance: Shields board members and executives from personal liability for decisions made on behalf of the organization.
Property Insurance: Covers damage to the organization’s property, including offices, equipment, and supplies.
Workers’ Compensation Insurance: Required by law for nonprofits with employees, covering work-related injuries or illnesses.
Volunteer Accident Insurance: Protects volunteers in case of injury during nonprofit activities.
Cyber Liability Insurance: Covers losses from data breaches or cyberattacks affecting the nonprofit’s systems or donor data.
Vehicle Insurance: If you own and operate vehicles as a part of your activities.

Who Should Know This

Nonprofit Executive Directors: To ensure appropriate coverage for operations and compliance.
Board Members: To understand their liability and the importance of D&O insurance.
Operations Managers: To manage policies and claims effectively.
Funders and Stakeholders: To verify the nonprofit is adequately protected and sustainable.
Volunteers: Depending on the type of activities, a volunteer should want to know if their actions are covered by insurance.

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