Insurance for Charitable Organizations

Some of the top factors that affect a charitable organization's insurance premiums include:

• Type of nonprofit: It costs more to insure public-facing social service organizations like food banks than organizations with fewer risks.
• Annual revenue: Nonprofits that earn more revenue are associated with costlier claims, which means they pay more for insurance.
• Number of employees. A larger workforce brings a higher risk of employee accidents and mistakes, which raises the cost of workers' compensation, general liability, and similar policies.
• Property value: The value of your building and other property determines how much you pay for property insurance.
• Business location: Localized factors, such as crime rates, healthcare costs, foot traffic, risk of natural disasters, and property values, can impact your insurance premiums.
• Risk management: Organizations that implement video surveillance, sprinkler systems, and other security measures, including cybersecurity controls, usually have lower premiums.
• Policy limits and deductibles: Insurance policies with higher limits and lower deductibles provide better protection, but come with a higher premium.
• Claims history: A nonprofit that has filed an insurance claim in the past will cost more to insure than one with a clean claims history.

Yes, public liability insurance is a less common term for general liability insurance, which is one of the most important types of insurance for a charity. It protects against common lawsuits from members of the public, including slip-and-fall accidents.

Charities often need public liability insurance in order to:

• Hold fundraisers. Event venues and municipalities may require liability insurance, so they're protected in the event of an accident on their property. For example, you might need liability insurance to hold a fundraiser trivia night at a local restaurant.
• Rent a commercial space. Landlords often require proof of general liability insurance before you can sign a lease for an office, community center, or other space.
• Get a business loan. Similarly, lenders may ask you to have general liability coverage in order to make sure their investment is safeguarded.
• Protect themselves. A general liability policy helps organizations pay for costly third-party bodily injuries and property damage. For example, if a visitor is bitten by a dog at an animal shelter and requires medical treatment, the resulting medical bills and legal fees could easily reach tens of thousands of dollars—costs that general liability insurance is designed to cover.

General liability insurance is especially important for charities that invite members of the public into their space, hold fundraisers, or provide services to the greater community. It helps pay for medical bills, property repairs, and legal fees, while helping your charity fulfill its contractual obligations.

Yes, charitable organizations may need special event insurance for fundraising events. General liability insurance covers normal day-to-day operations, but an event that introduces new risks—such as a walkathon, color run, or trivia night—may require additional coverage.

You can purchase one-day event insurance or short-term liability insurance to cover third-party accidents and sign contracts with venues and other entities. For instance, you could buy event insurance for a one-day 5k race, or seasonal insurance for a holiday toy drive.

However, there are several reasons to opt for year-round coverage instead:

• It's expensive to stop and start coverage. Charities that cancel their policies may see increased premiums or have difficulty restarting coverage, as it's a red flag for insurers.
• It may cost more in the long run. Going without insurance leaves you exposed to costly risks. For example, a fire at a summer camp that's closed for the season could destroy cabins and other property.
• Some policies won't provide coverage. Occurrence-based policies like general liability continue to cover incidents that happened while you were insured, but that's not the case for claims-made policies like professional liability insurance, which must be kept active to provide protection.

Yes, insurance companies often let you bundle different types of management liability insurance, including EPLI and D&O charity board insurance. It often costs less to buy insurance products together in a package from the same provider.

Together, these policies provide important protection for the decision-makers at your charitable organization:

• Employment practices liability insurance covers lawsuits related to wrongful termination, discrimination, and other violations of employee rights. For example, an employee might claim that your organization passed them over for promotion due to their age.
• Directors and officers insurance pays for legal costs if an officer or board member is sued for a decision they made on behalf of your organization, such as poor investment choices that wasted hard-earned donations.

Charities and other nonprofits often invest in the following insurance products to protect against unexpected out-of-pocket costs:

• Commercial property insurance covers burglaries, fires, storms, and similar incidents that damage or destroy property at your charity's headquarters.
• Business interruption insurance helps your organization recover from a forced closure due to a burst pipe or other covered property claim. It's also called business income insurance.
• Sexual abuse and molestation (SAM) coverage pays for legal costs stemming from abuse and molestation allegations, which are typically excluded by general liability and professional liability coverage.
• Volunteer accident insurance pays for medical bills if a volunteer is injured at an event held by your charity. General liability often excludes these types of injuries, so you may need this coverage for volunteers who aren't eligible for workers' comp.
• Cyber liability insurance helps charitable organizations recover financially from cyberattacks and data breaches. It helps cover the cost of notifying affected individuals and complying with your state's data breach laws.
• Commercial auto insurance helps pay for medical expenses, property repairs, and legal fees if a vehicle owned by your charitable organization is involved in an accident.
• Hired and non-owned auto (HNOA) insurance covers auto accidents involving personal, rented, and leased vehicles used for business purposes.
• Commercial umbrella insurance, similar to excess liability insurance, provides coverage when your general liability, commercial auto, or employer's liability insurance reaches the limit on a claim.

Insureon's licensed agents can help you find the right insurance solutions for your charity and answer your questions about coverage.

It's easy to find affordable business insurance with Insureon. Our easy online application lets you compare quotes from trusted insurance companies to find policies that fit your budget and your unique needs.

Other ways for charities to save money on insurance include:

• Bundle policies. You can often save money when you purchase two or more types of coverage in one package, such as a business owner's policy.
• Customize your coverage options. Choose lower limits or a higher deductible to reduce your premium, but make sure your coverage is sufficient to cover a claim and that you can afford to pay the deductible in a crisis.
• Avoid accidents and claims. Policyholders can prevent employee injuries and customer accidents that lead to claims by eliminating hazards and training employees and volunteers on safety. A clean claims history keeps your premium low.