What Types of Business Insurance Coverage Should I Consider for My Nonprofit?

January 30, 2024

Every business has its own unique insurance requirements, and non-profits are no exception. Because nonprofits rely heavily on fundraising and donations to operate, it can be devastating if an unexpected event leads to financial loss or legal issues. That is why securing comprehensive business insurance should be a top priority. With the proper safeguards, nonprofits can focus on their mission rather than worrying about potential risks that could hamper their important work. 

Understanding Nonprofit Insurance Needs

Nonprofit organizations need business insurance for many of the same reasons as for-profit businesses. Insurance protects against potential losses that could severely impact or even bankrupt a nonprofit. 

In addition, nonprofits often operate on tight budgets with little cash reserve. A single lawsuit or fire could destroy a nonprofit if they don’t have the proper insurance. Volunteers comprise the workforce of many nonprofits, creating increased liability exposures. If a volunteer gets injured, the nonprofit could face a lawsuit. 

Events and fundraising activities also increase the organization’s liability. Additionally, nonprofits often survive on grants and donations and could face disruptions from an unexpected catastrophe without the proper insurance. Nonprofits need tailored policies to account for their distinct risks and help ensure they can continue their mission, even in the face of unforeseen disasters.

Types of Business Insurance for Nonprofits

Nonprofits need several types of insurance policies to protect their operations and assets fully. 

General Liability 

This covers injuries, property damage, and personal injuries that happen on the nonprofit’s premises or as a result of their operations. It protects the nonprofit if someone slips and falls at their office or gets sick at an event.

Directors and Officers (D&O) Insurance 

A D&O policy protects board members and executives from personal liability if they get sued for actual or alleged wrongful acts. It covers legal costs and settlements. These roles are demanding and high-risk, so comprehensive protection matters.

Professional Liability 

These policies cover damages if the nonprofit faces a lawsuit for real or alleged negligence. These claims can get costly, so adequate coverage is essential to protect against financial losses.

Property Insurance 

Property coverage replaces or repairs buildings, equipment, and other assets that get damaged or stolen.

Coverage for Inventory and Supplies

For nonprofits with merchandise inventory, this covers the cost to replace donated or purchased items damaged or lost.

Workers’ Compensation

Even nonprofits face the risk of worker injuries. Workers’ compensation can provide medical and income benefits to eligible employees injured on the job.

Cybersecurity Insurance 

This covers costs related to data breaches, computer hacking, and other IT security failures.

Employment Practices Liability

This covers allegations of discrimination, wrongful termination, and sexual harassment.

About Brooks, Todd & McNeil

Since 1839, the independent agents at Brooks, Todd & McNeil have been pleased to offer our community the most comprehensive policy options from a variety of providers. Our dedicated agents are ready to put their 75 years of combined experience to work on your claims. To learn more about our products and services, contact us today at (800) 448-4567.