If you are like most nonprofits, your budget is tight and you need to manage your finances and operations carefully. A single large claim can wipe out your carefully managed assets. That is why you need to be armed with your insurance “six-pack,” six types of insurance you should have in place.
Think of the six-pack as the suite of insurance that covers the people, places, and things in your nonprofit world (in addition to the obvious and mandatory insurance, such as Worker’s Compensation). Your six-pack includes General Liability Insurance, Directors & Officers Insurance, Professional Liability Insurance, Product Liability Insurance, Property Insurance, and Auto Insurance.
Here is an overview of these six types:
General Liability Insurance
General liability, sometimes called “Commercial General Liability” or CGL, insures your organization against any injuries or incidents suffered by visitors, such as customers or suppliers. It also insures you against property damage caused by you or your employees, as well as the cost of legal defense against successful suits against you. Finally, liability insurance covers claims of false or misleading advertising.
Directors & Officers Insurance
Directors & Officers (D&O) insurance, as its name implies, covers the directors and officers of your nonprofit, many of whom are volunteers. D&O insurance is designed to protect personnel from claims that arise due to actions they have taken within the scope of their duties as officers, directors, or company individuals. Types of claims include most employment practices and HR issues, shareholder actions, reporting errors, inaccurate disclosures of company accounts, misrepresentations, inappropriate decisions made by company officers, and failure to comply with regulations or laws.
Professional Liability Insurance
Professional Liability Insurance, often known as “errors and omissions insurance” or “malpractice insurance” covers individuals and your nonprofit organization against claims against your failure to perform, or against financial loss incurred as a result of your actions. Unlike D&O insurance, Professional Liability insurance covers all staff, volunteers, and your non-profit organization itself.
Product Liability Insurance
Product liability insurance protects your organization from lawsuits by customers who make claims against any products you have sold. Your nonprofit may well be a service organization that is not in the business of selling a product at all. Even so, if you have a fundraiser, say a dinner, bake sale, or auction of goods and services, you may be, in effect, providing products to customers that can harm them.
Property insurance protects your facility in the event of fire, vandalism, natural disaster, or fire. This type of insurance covers not only your building but your fixtures, equipment, furniture, computers, and inventory. You want to make sure your policy recovers replacement cost, and you need to consider what sort of deductible makes sense for your organization.
Any vehicle that your organization owns will need to be insured with a business auto policy. In addition, if your staff or even your volunteers use vehicles as part of their work for your nonprofit, you may need auto insurance to cover them. They must, of course, have their own automobile insurance coverage, but you may need to carry some insurance as well to cover potential claims by injured parties.
Rollins Insurance can help you get your six-pack in place. No sit-ups required. We’ll drink to that. Call us.