Risk management is an important responsibility of non-profit organization (NPO) directors. It can range from avoiding financial risk through proper planning and investing, screening potential volunteers to keep staff and served clientele safe, and holding sufficient insurance coverage.
While most NPO executives will consult their professional insurance provider for details on their particular needs, here we offer some general information on what to consider to be safe—and smart—about insurance coverage.
Insurance is not perfect and won’t cover every situation a charitable organization is likely to run into. It can also be expensive—especially when an overzealous salesperson recommends coverage you either don’t need or don’t want. But insurance is useful and in most cases, necessary to protect an organization from financial risk.
General Liability Insurance: This usually covers a long list of claims that could be filed against an NPO. Check for lists of exclusions and if necessary, purchase separate riders or endorsements that will cover items your organization’s activities warrant.
Auto Liability Insurance: If your NPO’s volunteers drive on behalf of the organization in either their own or company-owned vehicles, you’ll need insurance to cover them. Generally, auto accidents are not covered by a general liability policy, which offers coverage for the driver, property damage, the vehicle and injuries to others, as well as the possibility that the other motorist involved in the incident is uninsured.
Casualty Insurance: In generally, casualty insurance covers damage done by third parties, vandals, floods, fires,earthquakes and building failures. Consider whether volunteers use their own property, such as laptops and tools, in the course of their work for your organization.
Professional Liability Insurance: This coverage could be needed in cases of claims made by clients against professional or licensed services.
Director’s and Officer’s Insurance: In cases where a volunteer director’s or officer’s actions cause a claim to be filed against the organization, this coverage would be very valuable. It can also help attract board members, since they’ll have the peace of mind of knowing theiy won’t be personally responsible.
Again, insurance regulations vary by state. Checking with your insurance provider about whether or not your organization needs the above coverages is something you should consider doing sooner, rather than later—to reduce the risk of loss to your non-profit organization.