Nonprofit event insurance: A guide to comprehensive coverage
Many nonprofit organizations (NPOs) rely on events to raise money. But great events come with great responsibilities, and possible liabilities. Whether your nonprofit holds an awareness walk, a fundraising dinner, or a community concert, risks are always present.
If your nonprofit organization regularly holds events, it’s important to manage the potential perils that could financially impact your organization’s operations. One of the best ways to protect your NPO against common risks is to purchase special event insurance.
What does special event insurance cover for nonprofits?
Event insurance for nonprofit organizations includes two main forms of liability coverage—property damage and bodily injury. If your business is accused of a bodily injury or property damage liability claim, your nonprofit event insurance will cover your legal fees and a settlement with the third party.
Third-party property damage
If you’ve hosted a fundraising event in the past, you know that property damage accidents are always a possibility. But even if a guest is responsible for the incident, your nonprofit is typically the one responsible for making things right.
Special event insurance coverage pays for any property damages your nonprofit could be ordered to pay in court so that your organization doesn’t have to use its own funds. That way, you can use the money to further help your organization’s cause.
As an example, let's say your nonprofit hosts a community football tournament and one of the players decides to celebrate after a touchdown. They spike the ball, and it bounces so hard that it hits the electronic scoreboard. The field owner is pretty upset and decides to sue your NPO for the damages. In this case, your nonprofit event insurance policy would pay to replace or repair the scoreboard.
Third-party bodily injury liability
You’ve probably heard the phrase, “It’s all fun and games until someone gets hurt.” When you’re running a charity event, injuries can be a major risk, depending on the nature of the activities. Fortunately, your charity event insurance covers third-party claims of bodily injury.
If someone gets hurt at your nonprofit’s event, special event insurance pays for the person’s medical bills and lost wages, up to the policy’s limit. If you had to go to court, it would also pay for your legal defense. Bodily injury claims can be costly, so it’s important to make sure you have enough coverage based on the types of events you host.
For instance, your nonprofit organization decides to host a charity 5K, and one of the runners trips over an unmarked curb on the course. They sprain their ankle and need to get treated at the emergency room. Your charity event insurance would pay for their hospital visit and X-ray, plus any rehabilitation expenses, like physical therapy.
Liquor liability insurance coverage for nonprofits
A standard special event insurance policy protects your organization from many of the risks you face when holding charity events. However, there are certain things that are not covered. The most common are alcohol-related accidents and liabilities.
If you are planning to serve alcohol at your next event, you need to add a rider to your special event insurance policy to cover liquor liability claims. A basic fundraising insurance policy usually excludes coverage for events where alcohol is sold or served because of the increased level of risk.
So, for example, if an event attendee was overserved and got into a fight with another person, your liquor liability insurance would pay for the fallout, whether it led to property damage or a bodily injury claim. Without liquor liability coverage, your nonprofit organization would have to pay out-of-pocket to settle the claim.
Why is special event insurance important?
If your nonprofit organization holds events on a regular basis, having special event coverage can offer valuable protection. No matter how big or small your NPO is, nonprofit insurance can be a key part of your risk management strategy.
Special event insurance is important because your nonprofit organization can face a wide variety of unexpected risks when hosting events. Participants can get injured, the event space can get damaged accidentally, and your nonprofit can get sued for the financial losses. Having nonprofit event insurance is also important if you want insurance to protect your volunteers.
In addition, your nonprofit might be legally required to have insurance coverage. Some venues require nonprofits to show proof of insurance in order to get an event permit. That way, the venue knows that if anything were to happen, your insurance would cover the claim.
How much does nonprofit insurance cost?
The cost of special event insurance is different for every nonprofit organization. Your premium depends on a variety of unique factors, including:
- The duration of the events
- The types of events your nonprofit organization holds
- The amount of risk associated with your events
- The number of people expected to attend your events
- The policy’s coverage limits
The median premium for one-day special event insurance is $182. For events lasting two to 10 days, the median premium is $250. For events longer than 10 days, the median premium increases slightly to $257.
Although you can get fundraising insurance for a single charity event, most insurance companies include coverage for multiple events in your policy. If this is the case, they will usually specify the maximum number of participants your event can accommodate, along with other limitations.
Long-term insurance coverages for nonprofit organizations
A standard special event insurance policy may be sufficient for some nonprofit organizations. However, if your NPO holds events on a more regular basis, you should consider purchasing long-term types of insurance that can provide additional coverage.
Not only do long-term insurance policies provide more protection, but they can also be more cost-effective if you’re hosting more than one or two events during the year. Here are some of the long-term business insurance policies that can be beneficial for nonprofit organizations:
General liability insurance
Commercial general liability insurance protects your organization against claims of bodily injury and property damage. A general liability policy can apply to events, as well as protect your organization against these claims at your place of business.
Professional liability insurance
Professional liability insurance, also called errors and omissions insurance (E&O), protects your nonprofit against claims of negligence, unsatisfactory work, breaches of contract, or work oversights. It can help pay for your legal fees, as well as settlements and judgments.
Business owner’s policy
A business owner’s policy (BOP) is a bundle that combines general liability insurance coverage with business property insurance. If you want both of these policies for your nonprofit organization, it’s usually cheaper to get a BOP than to purchase each policy individually.
Workers’ compensation insurance
Workers’ compensation insurance is required in most states if your nonprofit has employees on the payroll. If one of your employees gets sick or injured at work, this policy pays for their medical expenses and lost wages.
Although workers’ compensation is not required for volunteers, some states will allow you to purchase coverage for your volunteers, especially if you work with the same people frequently.
Learn more about your state’s workers' comp laws.
Commercial auto insurance
If your nonprofit owns vehicles that are used for business purposes and are driven by employees, you’ll need to get commercial auto insurance. If your employees drive their own vehicles as part of the nonprofit organization’s regular operations, look into a hired and non-owned auto insurance policy.
Employment practices liability insurance
Employment practices liability insurance (EPLI) will cover your nonprofit against employee lawsuits related to wrongful termination, discrimination, unfair hiring practices, and related accusations. If the employee sues your organization, this policy will pay for your legal defense.
Directors and officers insurance
Directors and officers insurance (D&O) can help you protect your nonprofit’s board members. If one of the board members or officers gets sued for a decision they made on behalf of the organization, such as poorly managing monetary donations, your D&O policy covers their legal fees.
Cyber insurance can help you your nonprofit recover from financial losses caused by cyberattacks and data breaches. If any data belonging to your donors is compromised, cyber liability can help pay for notification costs, credit monitoring, attorney's fees, and other costly expenses
Does special event insurance cover cancellations due to the coronavirus?
Most nonprofit event insurance policies do not include coverage for event cancellation or communicable disease. This includes cancellations due to COVID-19.
However, some special event insurance policies come with loss of deposit and event postponement coverage, which could cover the cost of event deposits, regardless of the reason for cancellation.
If you are planning an event and are concerned about a potential cancellation due to COVID-19, many insurance companies sell an event cancellation insurance rider that would include this protection.
You can always check with your insurance company if you think you might be eligible for a claim if your event gets canceled.
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