Do I Need Insurance for My Nonprofit?

This will be a very short post to answer a very common question, especially from small, startup nonprofits.

There are three questions that are often behind this question:

Question 1: We are a nonprofit – can anybody really sue us?

The answer to this question: Yes, they can. And they do. There’s no ‘Good Samaritan’ shield a nonprofit can hide behind.

Question 2: If I don’t have a contract in force, do I really need the insurance?

My answer: Yes. If you have operations and serve people on any level, you should follow best business practices and find coverage.  Your nonprofit is a business that has human and other assets to protect.

Often, a contractual requirement for coverage is the reason a nonprofit contacts us initially. For instance, a nonprofit wants to work with the state, so the nonprofit calls us for general liability coverage.

If the contract ends, there is an assumption that there’s no more need, even if the organization continues in operation. There might not be a law (outside of workers compensation), but that does not negate the exposure to a claim. A nonprofit that serves youth will still have the same exposure to a lawsuit whether a state or other contract is in place or not.

Question 3: We’re so small and are volunteer led, do we really need insurance?

The answer: Yes, especially if you want your volunteers’ assets protected. A volunteer has protection under your general liability policy, too. If someone sues your organization and a volunteer leader, then your coverage would give you protection.

Your nonprofit might only have $853 in the bank, but your volunteer might have $853,000. Wouldn’t it be nice to honor their work for you with a little insurance?

In summary…

Obviously, I sell insurance for a living. I make no bones about that. But when I’m asked the question, “Do I really need it?”. I have to say, “Of course you do!”

It’s not up to me, though. Do your thing. Make your own decisions. Just like very few houses burn down, there’s a good chance you won’t have a claim.

But what if….?

 

 

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