A Guide to Insurance for Nonprofits

Nonprofits provide vital services to many communities across Louisiana. However, even with the best intentions, unexpected events can arise, leaving your 501(c)(3) organization vulnerable. This is where insurance comes in, acting as a safety net to protect your mission and the people you serve.

While navigating the insurance world can seem overwhelming, understanding the key coverage options empowers informed decision-making for your nonprofit. In this blog post, we’ll break down the most common insurance policies nonprofits should consider.

Insurance Policies to Consider

• General Liability Insurance: This is your first line of defense, covering legal costs and damages arising from third-party claims of bodily injury or property damage caused by your organization’s operations. It’s essential for all nonprofits, regardless of size or activity level.
• Commercial Property Insurance: If you own or rent a building, this insurance policy safeguards your physical assets like equipment, furniture, and inventory against various perils, such as fire, theft, and weather damage.
• Directors & Officers (D&O) Liability Insurance: D&O Insurance protects your board members and officers from personal liability arising from decisions made in good faith while governing the organization. This is crucial, as even well-intentioned actions can lead to lawsuits.
• Employment Practices Liability Insurance (EPLI): This coverage protects your organization from claims like wrongful termination, discrimination, and harassment, filed by employees or volunteers.
• Commercial Auto Insurance: If your organization owns vehicles or reimburses employees for mileage, this insurance covers you in case of accidents while driving for business purposes.
• Cyber Liability Insurance: Covers costs associated with data breaches and cyberattacks.
• Special Event Insurance: Provides temporary coverage for unique events your organization hosts.

How Much Does Nonprofit Insurance Cost?

Nonprofits that are small, private organizations are often considered low-risk which means policies are often relatively affordable. A typical Business Owners Policy (BOP), which combines business property and business liability insurance into one convenient policy, costs an average of $85 per month, according to The Hartford.

For D&O Insurance, you could pay as little as $500 a year per million dollars of premium coverage, according to Insurance Information Institute (III). And considering the average D&O claim can cost around $35,000 to settle for non-profits (and $700k for all types of private companies) this is often worth the investment!

However, many factors go into the cost of insurance for your nonprofit including:

• Industry
• Claims history
• Location
• Number of employees and volunteers
• Coverage limits

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By prioritizing adequate insurance coverage, non-profits can operate with greater peace of mind, knowing they are protected from financial hardship and can continue fulfilling their mission without fear of unforeseen circumstances. If you are in need of an insurance policy for your nonprofit, please contact us today!