The better question is, what exposures do nonprofits face?
When it comes to insuring a nonprofit, think of how the organization will react when a claim is filed and what activities does the nonprofit perform.
Does the nonprofit have the following?
- Staff and procedures to properly handle a claim
- Proper insurance coverage
- Time, assets and the ability to respond
Nonprofit organizations may perform a variety of activities including fundraising, social services, hold special events or act as fraternal or social clubs.
Each of these nonprofits may face a series of exposures or risks that a proper nonprofit insurance policy can include. Here are just a few examples:
- A nonprofit general liability policy could cover a slip and fall at an American Legion.
- A nonprofit directors and officers policy could cover mismanagement of funds the nonprofit has received.
- Nonprofit liquor liability could cover a bartender at a VFW who served a minor with a fake id.
- Sexual abuse and molestation coverage could coverage a nonprofit for a volunteer who improperly contacted a victim of abuse.
- A property policy for a nonprofit could cover damage to the chamber of commerce building as a result of a fire
- The average cost to defend an employment claim is $150,000. The financial ramifications of not having Employment Practices Liability Insurance for nonprofits can be crippling.
So, now that we know some of the basic coverages, why should a nonprofit purchase insurance?
Statistics and facts can help a nonprofit understand the importance of insurance coverage.
- Nearly 85% of Non Profits have an annual budget that is less than the average cost to defend a claim closed through litigation.
- The personal assets of the individual nonprofit board members are at stake! Directors and officers insurance can help protect a board member’s home, investments, or other personal assets.
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