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Who is Covered under Your Nonprofit General Liability Insurance?

Who is Covered under Your Nonprofit General Liability Insurance?

An installment in an occasional series on some meatier insurance topics

There are many mysteries that surround a standard general liability insurance policy as it relates to nonprofits. Mysteries that many do not want to discover, yet might make or break an organization should a claim pop up.

It’s especially important for nonprofit and social service organizations since you have people involved that aren’t part of a normal small business.

One of the biggest mysteries is who in the world has coverage under a general liability policy. It’s not that mysterious. It’s always well-defined in the policy, both in the main policy sections and the attachments to the policy (commonly called ‘endorsements’).

It’s good to know, though, who you are covering when you purchase one of these policies. It’s also good to know who you are NOT covering.


Who is Covered and Defended by your General Liability Policy

In Section II of the standard Insurance Services Office standard General Liability policy (nearly universally adopted by commercial insurance companies with the occasional tweak), we find ‘Who Is An Insured.’

Since we’re concerned about nonprofits here, we’ll skip to 1.d:

If you are designated in the Declarations as… An organization other than a partnership, joint venture or limited liability company, you are an insured. Your “executive officers” and directors are insureds, but only with respect to their duties as your officers or directors. Your stockholders are also insureds, but only with respect to their liability as stockholders.

We’ll also hit paragraph II.2:

a.  Your “volunteer workers” only while performing duties related to the conduct of your business, or your “employees“, other than either your “executive officers” (if you are an organization other than a partnership, joint venture or limited liability company) or your managers (if you are a limited liability company), but only for acts within the scope of their employment by you or while performing duties related to the conduct of your business.

b.  Any person (other than your “employee” or “volunteer worker”), or any organization while acting as your real estate manager

(Copyright Insurance Services Office, Inc. CG0001, emphasis added)

Note that I’m skipping some of the sub-paragraphs in here as they will show that volunteers, employees, etc. don’t have coverage themselves if they cause injury or property damage to the organization’s people and property. Those things are addressed in different policies.

My main purpose here is to show the categories of people that might have coverage. Then I’ll lead you in an exercise to define which categories you need to be concerned about covering.

  1. The Organization Itself: I know this isn’t a ‘category of people’, but it’s good to know that the entity itself would have defense under your general liability policy.
  2. Executive Officers and Directors: I’ve found a lot of confusion about this. Often, a client will assume that a Directors and Officers policy will cover the officers and directors for all types of losses. In reality, the D&O policy only addresses business and other more management related decisions. It does NOT defend Ds and Os against claims of negligence involving property damage and bodily injury. The General Liability policy protects them if there’s a claim involving a physical or other event that results in damage property or injured persons.
  3. Volunteer Workers: Volunteers are covered! This means they’re covered if they are named in a suit against the organization – except when they are responsible for bodily injury to another volunteer or employee (tricky, right?).
  4. Employees: Your employees, if named, have coverage under the GL policy. As for their injuries, that’s what Workers Comp is for.
  5. Real Estate Manager: Most of you aren’t concerned about this, but in case you are, your real estate or property manager is automatically an insured on your policy.

Those are the automatically, unendorsed categories of folks who are ‘insureds’ on your policy.

Be Aware of your Policy’s Endorsements

An important omission is ‘Independent Contractors.’  If you pay people on 1099s, then there can be some ambiguity and concern about whether those individuals are covered. Ask your agent about the Additional Insured – Independent Contractor endorsement.

Some companies will add it, others might not. Just be aware that you might have a gap – a gap that leaves the person uncovered.

There are endorsements that can both limit, exclude, or add individuals (and categories of individuals) in relation to your policy.

The main thing is this: Know who you want to have coverage on your policy and communicate this to your agent. Most agents will know how to scour the market to take care of your needs.

How to Define Who You Want Covered

Brainstorm the answer to this question: ‘Who does the work of our organization?’

It’s that simple. Name the people and groups of people that do your work. It can include the categories above and any other additional groups:

  • Do you have interns?
  • Do you have client workers?
  • Do you have volunteers?
  • Do you have community service volunteers?
  • Do you have 1099s or independent contractors?

Remember, your organization will typically have coverage for any claims resulting from the acts of any individual related to your work. The problem arises if the person is named individually, i.e. ‘ABC, Inc. and John Doe were negligent.’ If you want to make sure ‘John Doe’ is covered, then make sure his category is addressed in the policy or by an added endorsement.

If John Doe is a contracted social worker and you want to cover John Doe (not just your organization for John Doe’s work on your behalf), then you better discuss this need with your insurance agent. Different companies address independent contractors in different ways. Some will NOT cover them on principle.

By now, you either are thoroughly excited to make sure your important human resources are covered or you’re royally confused.

If you are either, please drop a question or comment in the comments below. I’ll try to address them.

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Also remember that you should consult with an insurance professional regarding your circumstances. I am not claiming to be speaking to your specific circumstances.



  1. Bekah Fisher says:

    What do business owners do when they run such a small operation that the cost of insurance takes all their profit? A tutoring service I know comes to mind. They meet with clients once per week for a couple of hours. Each employee or independent contractor tutor only makes a little over $1000 per year.

    • Brett Cohrs says:

      That’s a tough one. Option 1: You can self-insure your risk. Option 2: Often too late for this by the time the insurance issue comes up, but business owners factor in all kinds of costs related to starting and running a business. Often, insurance is a last minute consideration and seems like an ‘extra’ cost. Just like with anything else (owning a car, house, health), it is a necessary cost that needs to be considered. Each situation is different. If I were a tutor who had to pay for my own insurance and I was only making $1,000 a year, I’d either find more clients or stop tutoring for that agency that wasn’t covering me. I hate to say that.


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