Addressing Prevalent Nonprofit Risks

Those who secure the insurance needs for nonprofits hold a big responsibility. Unfortunately, all too often, there are gaps left unprotected, so it is essential to fully understand your coverage needs and evaluate the products and process. The reality is that inadequate coverage exposes your nonprofit to costly financial losses. Purchasing separate policies for individual needs will likely allow for more flexibility to customize the coverage to fit the organization's needs best. Addressing all of your risks will take time and attention. A couple of the top exposures to consider are program or organization changes and marketplace changes.

Liability Policies

Your insurer can develop unique and custom policies based on:

Commercial General Liability (CGL)

Protects a wide range of commercial, industrial, and nonprofit operations and various types of claims associated with bodily injury and property damage liability, medical payments coverage, and personal injury and advertising injury liability. It covers the policy's insured parties' legal liability for damages arising out of unintended injuries to non-employees and damage to other properties, including investigation and defense.

Directors’ & Officers’ Liability (D&O)

Covers management decisions of volunteer board members, officers, employees, and the organization itself that lead to a claim. It insures current and past board members and can be used to attract new board members. Every D&O policy is so different from the next, so be sure to read it closely to understand the protection.

Employment Practices Liability (EPL or EPLI)

These handle claims alleging wrongful employment acts. Common claims defended by EPL policies are wrongful termination, employment discrimination, sexual harassment, age discrimination, religious discrimination, disabilities violations, and illegal retaliation.

Professional Liability (PL)

Covers claims alleging errors and omissions in performing professional services. This is a crucial protection for organizations dealing with social services and health.

Umbrella Coverage

Protects the organizations from high-limit legal liability that is not fully insured by other policies for various types of injuries and property damage arising from accidents during the policy period. Umbrella policies provide additional dollar limits of coverage for what exceeds your other policy limits.

Building and Contents Coverage

There are various options for insuring owned or leased buildings, their contents, other personal property, and property that belongs to others but is used by the entity. "Covered property" typically includes:

• The structural buildings themselves
• Machinery
• maintenance equipment
• Appliances
• Furniture
• Leased property you’re liable for
• For leased premises, your obligations to the building

Crime Coverage

Protect an organization against intentional theft by insiders and by third parties. It provides coverage for:

• Theft, disappearance, and destruction
• Robbery and burglary
• Computer fraud
• Extortion
• Liability for another’s property

Workers’ Compensation

There is legal liability for their on-the-job injuries in which the employer is typically responsible for the injured employee's medical expenses, rehabilitation costs, and a portion of lost wages. These add up quickly and become a large financial burden, so it is very important to protect the organization.

Business Interruption

Business interruption protection will cover the loss of net income and expenses during a period when the organization can not function as it would due to damage or destruction of property. These claims can be tricky as they rely on projections of future income streams and expenses. Speak to an insider about how you can protect the organization.

Common Nonprofit Liabilities

Sexual Abuse and Molestation

Sexual abuse and molestation are very serious issues that happen much too often, even in nonprofit organizations. Today sexual abuse and molestation coverage can be proactively covered by a stand-alone policy form specifically addressing this issue, a separate section of a package policy, or an addition to a professional liability policy.

Automobile Liability

Just about every nonprofit relies on vehicles which bring legal obligations. Accidents are a primary source of liability claims from employees or volunteers driving the organization's vehicle. If personal vehicles are used for the nonprofit's activities, the nonprofit may still have some secondary legal responsibility. Auto insurance for nonprofits is somewhat similar to personal automobile insurance policies.

Cyber Liability

Your NJ nonprofit insurance plan should also include a cyber liability policy that can offer third-party and first-party protection. First-party coverage protects the insured for its losses such as crisis management, regulatory investigation expense, data breach liability, content liability, and business interruption. Third-party coverage protects the organization from claims relating to third parties (donors, clients, etc.) losses.

About David G. Sayles Insurance Services

At David G. Sayles Insurance Services, we help our clients decide which of these options is best for them based on their current situation and risk factors.  Contact us at 1-855-977-1842 or insureme@dsayles.mysites.io for a consultation!