Non Profit Insurance
No two Non Profit’s are the same and you wont all have the same Non Profit Insurance needs. You need to make sure you consider all of the different types of insurance. Even if you are not looking to make a profit, the proper insurance is important to protecting your assets as well as your people. Here are some of the most important Non Profit Insurance Policies you can consider.
Non Profit Insurance: Directors and Officers
Directors and Officers coverage, or D&O is usually the first coverage most non profits ask for. You may assume that it would coverage against any and all lawsuits, but this is more of a management liability insurance. It insures the organization for ‘Wrongful acts’. This policy will help cover Defense Costs, Settlements, and Judgements from lawsuits that are covered due to Wrongful Act allegations. Sometimes board members may be held personally liable for the actions of the organization.
What is a wrongful act? Every policy will define a wrongful act differently (D&O policies vary by company), in essence, a wrongful act is a leadership team’s breach or neglect of fiduciary obligations. You’ll want to review to make sure the policy does what you want it to do. Always make sure you read the policy’s definition of Wrongful Act as well as its list of exclusions. If you have a question on an exclusion or you see one that makes you nervous, ask us how to get that exclusion covered. We can always look at through a different company’s Non Profit Directors and Officers Insurance policy or a different type of policy altogether to cover those exclusions.
This is the first policy your Non Profit needs to protect its assets and the board members.
Here are some claims examples from USLI Insurance:
- The trustees of a trade association decided to expand their activities into areas that were not explicitly envisioned by the founders. Their state’s attorney general brought an action against them alleging misuse of funds and property for operating outside their charter, even though no third party had raised a complaint.
- A local chamber of commerce published a quarterly newsletter. The newsletter included a tourism section,promoting places of interest, attractions, restaurants, etc. A new restaurant had recently approached the chamber with a request to advertise in the upcoming issue The chamber agreed and accepted a minimal advertising fee from the restaurant. Upon release of the next issue, it was discovered that the Executive Director never expedited the restaurant request and actually kept the money. The restaurant in turn sued the chamber for breach of fiduciary duty, breach of contract and interference with economic interests.
- A donor made a large contribution to a foundation to aid students in need of tuition. The board instead voted to expand their headquarters and commit a portion of the donation to the building fund. The donor filed suit, alleging misappropriation of funds. Damages included return of the full contribution plus interest. As some of the money was already spent, the foundation was financially unable to return the entire donation.
Non Profit Insurance: Employment Practices Liability Insurance
Usually we package the Employment Practices Liability Insurance with the Non Profit Directors and Officers Insurance. This coverage protects your Non Profit for claims of Sexual Harassment, Discrimination, some cases of Wrongful Termination, or claims of a hostile workplace. When it comes to coverage you also want Third-party coverage. This refers to claims made by non-employees or customers that allege that an employee engaged in wrongful conduct – typically discrimination or sexual harassment.
Here is a claims example from USLI Insurance:
- A chamber of commerce advertised an open position for a secretary. The organization received seven applications. Only one applicant was a male,who was 57. He was not interviewed. He alleged he was not interviewed because of his age and filed suit against the organization for age discrimination.
Non Profit Insurance: General Liability Insurance
The Non Profit General Liability Insurance is another policy most non profits should carry. Usually the General Liability Insurance comes in a package which can also include Professional Liability and Abuse & Molestation Liability.
What is covered under a General Liability policy?
- Claims of Bodily Injury or Property Damage
- Defense for Personal or Advertising Injury
The Non Profit Professional liability insureds you for services that may be considered professional in nature whether you employ licensed professionals or not. If your Non Profit has any of the following examples then you should consider Professional Liability.
- Educational Services
- Teaching Life Skills
- Counseling or case management exposure at all.
The Abuse and Molestation Liability coverage typically provides defense and, if required, claim settlement funds for lawsuits. These types of claims can even be the a result of accusation from a client regarding the Non Profits employees, volunteers, or contractors that there was an act of abuse. These types of claims can also result from negligent supervision
Abuse and Molestation claims are usually excluded from both the General Liability and Professional Liability policies. Who needs Abuse and Molestation coverage? If you serve the youth, seniors, developmentally disabled you should consider this coverage.
Here are some claims examples from USLI Insurance.
- A guest at a beer garden event sponsored by the chamber of commerce was struck on the head with a beer can thrown by a bartender. The guest filed a claim due to bodily injury.
- A tent at a designated fundraiser was not anchored properly.The tent blew over and damaged multiple parked cars.The car owner sued for repairs.
- The insured is a Family and Crisis Counseling operation. A family was directed by the court to seek family counseling at this facility. There was an abusive father in the family. The mother was trying to get a restraining order regarding child visitation rights for the father as a result of past mistreatment. The counselor at the facility was asked to made a recommendation. The counselor disagreed with the mother’s opinion and recommended to the court that the father be allowed to continue unsupervised visitation. The father physically abused one of the children causing bodily injury. The mother sued the facility based on counselor’s recommendation.
- The parents of a troubled teenager took their child to a counseling facility for help with depression. After talking at length with the teenager, the Counselor shrugged this off as“typical teenage behavior.” He sent the teenager home and scheduled a follow-up visit. Unfortunately, the child committed suicide later that week. The parents filed a suit against the counselor alleging this would not have happened had the counselor recognized the signs and referred their child to the proper facility.
- A drug addict revealed to his counselor that he was HIV positive. The counselor referred his client to a clinic to address his medical condition. The clinic requested a copy of the client’s file. The counseling facility released the information without obtaining a signed release form. The client sued the facility for breach of the “privacy act.”
- A 14-year-old girl went to a counseling agency and did not like her counselor. To avoid future visits,the girl stated the counselor improperly touched her The parents sued the facility.
Non Profit Insurance: Workers Compensation
Workers Compensation is important because they address injuries to your employees. While workers comp laws vary widely by state you should carry Workers Compensation to cover an employee if they are injured. The Non Profit Workers Compensation policy pays medical expenses, disability, and death benefits. A lot of Workers Compensation policies will exclude Volunteers, and a separate Volunteer accident insurance policy may be needed to cover volunteers that are injured. General liability will not provide coverage for injuries to employees.
Non Profit Insurance: Other Coverages
Property Insurance – When you own property or even rent some space, a Property Insurance policy is needed. Property Insurance can usually be packaged with the General Liability, but at times can be on their own separate policy. A Property insurance policy can cover you for some if not all of the following; pipes bursting in an office, windstorm, fire, hail damage, theft, and vandalism.
Commercial Auto Insurance – Covering you for vehicles you own. Even if your nonprofit does not own a vehicle you should consider including hired/non-owned auto coverage.
- The Non-owned auto liability provides liability insurance for the organization when someone uses his or her vehicle for activities related to the nonprofit: running errands, transporting clients, etc.
- Hired auto liability provides liability protection when the organization rents a vehicle.
Employee Dishonesty – also known as crime coverage and it may be on a crime bond. Employee Dishonesty helps replace funds stolen by an employee.
Cyber Liability – With data breaches of customers information Non Profits can experience Cyber Theft. Examples of the type of data that can be stolen are Donor data, employee data, confidential client data, and more.
Contact us at 505-265-3704 so we can work with you on your Non Profit Insurance needs.