The nonprofit industry is made up of nearly 1.5 million organizations that range from churches and religious groups to colleges and universities, hospitals, and animal shelters. In addition to their size, these organizations vary greatly in their day-to-day operations. Some can be quite complex. For example, a museum may have an art collection valued at hundreds of millions of dollars, while a university may conduct medical research on its campus.
While some nonprofits may start small, many grow into large organizations with extensive assets. The Church of Jesus Christ of Latter-day Saints (LDS), for example, is one of the largest religious organizations in the world, with billions of dollars in assets.
This makes them an appealing target for lawsuits and crime. If your nonprofit faces similar risks, it’s time to invest in an insurance review and updating your nonprofits insurance coverage. Insurance can help ensure you have the resources to cover damage or injuries that occur on your property — whether it’s due to a natural disaster or human error.
Reasons Why Having Insurance For Nonprofits is Important
Nonprofits rely on charitable contributions to help fund their projects and programs. To secure these donations from public individuals and private organizations alike, nonprofits must maintain a positive reputation among their donors and community members. Because nonprofits often work with sensitive information (e.g., credit card numbers), legal issues can easily occur if data is compromised or stolen by hackers or other cyber criminals. When this happens, nonprofits run the risk of losing their current donors, which can prove fatal for their organization if they don’t have the funds to continue operating as normal.
Nonprofits are more susceptible to lawsuits than traditional for-profit companies, because they often deal with sensitive information (e.g., medical records) that could fall into the wrong hands. The risks of lawsuits could be too much to handle for these organizations, and can lead to them going under. To handle this risk they need to have insurance policies that take on the risk for them.
Churches and other religious organizations often have multiple volunteers coming in and out of the organization every day. Even if they do not have paid employees, these groups still need insurance because they can be held liable for any accidents that take place on their property or at their events. Consider adding volunteer workers’ compensation insurance coverage to your nonprofits insurance program.
When you work with a large group of people, there are always risks involved. Even if a volunteer signs a waiver absolving your organization of liability, that waiver may not hold up in court. If a volunteer injurers a guest who sues your organization and you don’t have proper insurance to cover it, you could be in trouble.
Some Common Situations
Here are some common examples of situations where an insurance policy can be useful for your organization:
-A volunteer is at an event selling and is working to fix the light bulb in the corridor. The volunteer loses their balance, falling off the ladder and breaking their leg when they hit the ground. In addition to medical bills, lost wages, and other costs, there could also be a liability claim against your nonprofit if the volunteer blames you for their injuries.
-Your nonprofit has been repairing and cleaning up houses hit by a tornado or hurricane. When you go to work on another house, one of your volunteers trips on a loose plank, hitting their head and suffering a concussion. Once again, there could be medical bills, lost wages, or other damages that your nonprofit may have to pay if the volunteer files a claim against you. A workers’ compensation policy would provide coverage in this type of situation.
Types of Insurance Policies Nonprofits Need
Liability exposure is high due to the interaction with employees, volunteers, members, and the general public. Most nonprofits have some form of liability insurance protection, but it is not uncommon for coverage limits to be inadequate for the exposure. The main types of coverage needed by nonprofit organizations are:
General Liability Insurance For Nonprofits
This insurance protects if your organization is sued or held legally responsible for an injury or property damage. General liability insurance for nonprofits, covers legal defense and claims that arise from injuries and property damage to third parties.
If someone is injured on your premises or you inadvertently cause damage to another person’s property, general liability insurance can cover legal costs as well as any settlements or court awards.
Organizations that use volunteers may want to consider additional coverage for these individuals under their general liability policy. A volunteer could be held personally responsible for damages caused by any act or omission in connection with the duties performed as a volunteer.
For example, a visitor trips on a cracked sidewalk and breaks their arm. Coverage would include medical expenses and legal defense costs regardless of whether you were found liable for the accident.
Many nonprofits also own buildings that they rent out to businesses or other entities. If a visitor slips and falls on your premises and sues your organization, general liability insurance can pay for the injured party’s medical expenses and legal fees.
Directors and Officers Liability Insurance
This insurance protects senior management and board members against lawsuits that claim wrongful acts in the course of managing a nonprofit organization. It covers claims made by employees, clients, and even volunteers. In addition, this type of policy usually covers court costs.
This coverage protects the directors and officers of a nonprofit organization against liability related to their actions as business leaders. For example, if an officer is accused of embezzling funds, this coverage can help pay for legal fees and damages. Coverage may include defense costs and punitive damages (in states where they’re permitted) that arise from such cases.
Employment Practices Liability Insurance
Employment practices liability insurance, covers wrongs committed against employees such as wrongful termination, discrimination, harassment, and retaliation. Some employment practices liability policies also cover failure to hire/promote claims and negligent evaluation claims where an employee alleges that they were denied employment or promotion because of inaccurate information in an employment background report prepared by your organization. For nonprofits dealing with 3rd parties such as restaurants, you may be able to include additional coverages for third party liability insurance against your employees.
If you own a vehicle that is used for work purposes, it should be covered by commercial auto insurance instead of personal auto insurance. Commercial auto insurance provides much more coverage than personal auto insurance, so your expensive vehicles are protected both on and off the job site. If the vehicle is in the nonprofits name, it is required to be insured under a commercial auto insurance policy. Insurance companies require an “insuranceable interest” in order to provide insurance for property.
Professional Liability Insurance
Professional liability insurance covers claims against your nonprofit, for errors or omissions in the course of providing professional services. You might consider this coverage if you provide professional advice or guidance to other organizations as part of your work. If you make a mistake while providing services to another organization, they may file a claim against you for damages. Professional liability insurance can cover related legal costs and any damages that may be awarded. An example of this would be a heating and aircondition company who designs a system. If the system fails to adequately heat or cool a home due to their design error, this would fall under this nonprofits professional liability coverage.
Property Insurance Coverage For Nonprofits
Nonprofits need insurance to protect valuable assets and property coverage. It includes protection for buildings, business personal property, and equipment owned by your nonprofit, such as computers, office furniture, and other items. If you own the building you occupy, this coverage would cover repairs after a fire or other disaster. If you rent space, this coverage can help replace the building improvement completed by the tenant and replace damaged items within it. This insurance can help nonprofits protect their physical assets (buildings, vehicles, and equipment), their financial assets (investments and savings), and their organization’s value (brand, reputation, and ability to operate).
Property insurance also covers outdoor fixtures against damage caused by fire, lightning, theft, vandalism, and more. It also covers your equipment, inventory, and supplies in the event of a loss.
Property insurance can cover damage done by fires, storms, vandalism, or theft. A pipe bursting in your sanctuary could cause thousands of dollars worth of water damage, for example. Property insurance will compensate you for these costs when they happen without having to dip into the church’s fund. Without this protection, repairing damages from natural disasters could leave your congregation in debt for years.
This type of policy is especially important if you own property because there could be a significant financial loss if something happens to that property. Generally speaking, there are two types of coverage available: all-risk coverage and named-peril coverage.
All-risk coverage offers protection against perils not specifically excluded by the policy, while named-peril policies only protect against risks specifically outlined in the policy document. Not every insurer offers both options so check with them before purchasing a policy.
Property policies do not cover your building or business personal property as a result of an earthquake or flood. Nonprofits would need to purchase two additional policies, in order to have the needed protection from these types of losses. Earthquake and flood companies will use your property coverage found on your declarations page, to calculate the needed coverages. The cost for these two additional coverage, range based on the location of your church or nonprofit organization.
Workers Compensation Insurance For Nonprofits
This coverage insures against injuries that occur on the job, including illness from exposure to toxic substances. In most states, employers are required to carry workers’ compensation insurance coverage when they have 1 employee. Some states may only require workers’ compensation insurance when a nonprofit has three to five employees. Workers’ compensation insurance covers medical expenses and lost wages for employees injured on the job.
This type of insurance is required by law in most states and protects both the employees and the church if an employee is injured while on the job.
In order to keep your insurance cost down, it is important to have a safety program and return to work program in place. A safety program should include monthly staff meetings going over job specific training, to identify specific risks associated with their specific jobs. It is important to take proactive preventable measure for office workers, such as using ergonomic keyboards, mouse, and chairs. This can reduce carpal tunnel claims, which can add up to tens of thousands in insurance claims. A return to work program also helps keep claims lower, by allowing injured workers to return to work sooner to perform lighter duties they are capable of doing.
By reducing your claims, your workers’ compensation premiums will also be reduced. Depending on how much you pay into your insurance premiums, you can develop and experience modification factor, which can further provide for some additional savings.
The impact of sexual abuse cases in churches can be devastating for a church. This is true if the claim is deemed to be true or false. The number one reason for the biggest legal problems for churches is sexual misconduct. Churches have such a vast amount of children in their organization and are under such scrutiny, having a written policy and procedure manual and proper staff training can help prevent these types of incidents. When nonprofits can actively implement and follow these policies, this helps reduce if not eliminate lawsuits, which can cost big money.
These cases can cost hundreds of thousands of dollars on legal fees alone, when a case goes to trial. By having abuse and molestation insurance coverage as part of your overall church insurance program, churches can receive money that will help offset their legal fees, should such a case arise. Having this insurance helps even the playing field for all involved, allowing the church to cope with such a situation without draining all of their funds.
While our primary interest as churches and nonprofits is to protect the most vulnerable, it is important to have the proper risk transfer mechanism in place. Church insurance brokers are their to help facilitate and evaluate all of your liability needs. They can also provide sample policy and procedure language for your nonprofit to review and have approved by your legal expert.
Religious Expressions Coverage
For nonprofits who operate within the confines of religious beliefs, obtain religious expressions coverage will be vital to your operations. This policy protects your church or nonprofit based on your long help religious beliefs. As this is a relatively new coverage, it is still in its infancy stages as related to the coverage it will extend to religious organizations. We believe that with time, higher sublimits will be added to this coverage. Prior to this new coverage being added to your commercial package policy, churches were left to defend themselves related to these types of claims. Mental anguish claims are the most common types of claims that result from this type of coverage. When someone feels wronged by your organization’s beliefs, as they collide with someone else’s belief system.
There’s also products liability coverage against claims resulting from the use of products sold, distributed, or given away by your church or NGO; completed operations coverage against claims made because of faulty workmanship; and medical payments coverage that pays the cost of medical treatment for people injured on the premises. It is important to discuss all of your operational exposures with your nonprofit insurance agent, to ensure they have a clear understanding of which coverages you will need to have in place.
Get the Best Insurance Today
Nonprofits are a vital part of the American economy. These organizations help the less fortunate, provide needed services and educate and entertain us. They exist to serve others but they need to look after themselves, too. This is where good insurance brokers can help and we highly recommend Integrity Now Insurance Brokers.
They help provide nonprofit organization with their insurance, regardless of their size. Their customized coverage can help nonprofits protect their assets and avoid a financial crisis following an accident or lawsuit.
They are passionate about helping NGOs, their volunteers, and workers and work together to complete the organization’s goals. They help protect Nonprofits who can be held responsible for accidents or events that take place on their property or at their events. They serve numerous NGOs across America and give the protection they deserve.
They understand the needs of churches and help get the best deal possible. They are renowned for their top-notch customer service and offer a comprehensive portfolio of insurance services including abuse and molestation insurance, general liability insurance, and employment practice liability insurance. Visit their website to learn how their church insurance can benefit your organization.
Contact their church insurance brokers today for the best church insurance plans in Arizona, California, Colorado, Nevada, Ohio, Texas, and Washington. Call them at (877) 854 7396 to get started.