General liability insurance for nonprofits

The cost of general liability insurance for nonprofits depends on several factors that help insurers evaluate your organization's level of risk during underwriting, such as:

• Nonprofit services and activities: Organizations that offer counseling services, operate animal shelters or pet adoption programs, run youth activities, or host frequent fundraising events may face greater liability risks than nonprofits with primarily administrative or advocacy-focused operations.
• Business premises: Organizations that regularly welcome visitors, clients, donors, volunteers, or event attendees may face a greater risk of slip-and-fall accidents and other third-party injury claims. Factors such as building condition, accessibility, and the types of activities conducted on-site can all influence your premium.
• Business location: Where your nonprofit operates can influence premium costs. Local legal environments, claim trends, population density, and the likelihood of lawsuits can all affect insurance rates. Nonprofits located in areas with higher claim costs or increased public interaction may pay more for coverage.
• Number of employees and volunteers: The size of your workforce, including both paid employees and volunteers, can affect your exposure to liability claims. Organizations with more people interacting with clients, donors, beneficiaries, or the public generally have a greater chance of incidents occurring during daily operations.
• Coverage limits and deductible: Higher coverage limits provide greater financial protection but typically result in higher premiums. Choosing a lower deductible may also increase your insurance costs because the insurer assumes more of the financial risk when a claim occurs. Many nonprofits increase their liability limits to meet contractual, grant, or venue requirements.
• Policy add-ons and additional insureds: Adding endorsements or extending coverage to other parties can increase the cost of your policy. For example, event venues, landlords, grant providers, or partner organizations may require your nonprofit to add them as an additional insured before allowing you to use their facilities or participate in certain activities.
• Claims history: Nonprofits with a history of filing liability claims are often viewed as a higher risk by insurers. Previous claims, especially those involving injuries or property damage, may lead to higher premiums, while a strong claims history can help your organization qualify for more favorable rates.
• Special events and public interaction: Many nonprofits host fundraising galas, community outreach programs, charity runs, festivals, or other public events. Organizations that regularly welcome large groups of attendees or conduct activities off-site may face additional liability risks that can influence the cost of coverage.

While general liability insurance covers many common risks, it doesn't provide complete protection. Accidents involving your employees or property damage can happen at any organization. Other nonprofit insurance policies to consider as part of your risk management plan include:

• Business owner's policy (BOP): A BOP bundles general liability coverage with commercial property insurance, often at a lower rate than purchasing the policies individually.
• Professional liability insurance: Also known as errors and omissions insurance (E&O), this policy can help cover legal expenses if your nonprofit is sued for mistakes or negligence.
• Directors and officers (D&O) insurance: D&O insurance protects board members and officers if they're sued for a decision they made on behalf of your nonprofit that led to financial loss.
• Workers’ compensation insurance: Nearly every state requires this coverage for organizations that have employees. Even when it's not required, it's a wise investment as it'll cover medical costs for work-related injuries, which could be denied by personal health insurance.
• Employment practices liability insurance (EPLI): If a nonprofit is sued for violating employee rights, such as wrongful termination and discrimination, EPLI can pay for legal costs.

Many nonprofits carry both a general liability policy and directors and officers liability coverage because they address different types of risks.

General liability insurance helps protect against common third-party claims that arise from your organization's operations, while D&O insurance is designed to protect the nonprofit's board members, officers, and leadership team from claims related to their management decisions. Because nonprofits face both operational and governance-related exposures, these policies often work together to provide more comprehensive protection.

Many organizations also purchase D&O insurance alongside employment practices liability insurance (EPLI) as part of a management liability insurance package. Bundling these coverages can help protect nonprofit leaders from a wider range of management and employment-related claims while simplifying coverage management.