Nonprofit Organizations Business Insurance
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Professional liability insurance for nonprofit organizations

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Professional liability insurance

Professional liability insurance, also called errors and omissions insurance, protects small businesses against the costs of client lawsuits over unsatisfactory work.

Professional liability insurance guards against errors

A work mistake or alleged negligence at your charitable organization, community center, or other nonprofit could lead to major lawsuits and losses, resulting in a tremendous financial burden for your small business.

In the event that a community member or client sues your organization, professional liability insurance can cover attorney’s fees, court costs, and even settlements or judgments. You may also see this coverage referred to as errors and omissions insurance (E&O).

This policy provides liability coverage related to:

  • Work mistakes or oversights
  • Failure to provide promised services
  • Allegations of negligence

Bundle policies for a discount

Nonprofit organizations may be able to bundle professional liability insurance with general liability insurance or a business owner’s policy (BOP) to receive a discount on their premium. Talk to a licensed Insureon agent to explore your options.

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What coverage can professional liability insurance provide for nonprofits?

Work mistakes or oversights

Being accused of a professional mistake can be costly, especially for a small business. If your animal shelter skips a background check and an adopted pet is abused, you could face an expensive lawsuit. Professional liability insurance for nonprofit organizations can help cover attorney’s fees, court costs, and other legal expenses.

Failure to provide promised services

As a nonprofit professional, you try to offer solutions to important social problems. However, your efforts might not always go as planned. When your nonprofit is accused of not fulfilling its promises, professional liability insurance can cover the cost of a lawsuit, including a settlement or court-ordered judgment.

Allegations of negligence

Nonprofits that provide counseling or guidance can be exposed to massive liability. For example, if a staff member at your counseling center fails to recognize suicidal ideation in a teen, your organization could be accused of negligence if the teen later causes self-harm. In the event of a lawsuit, professional liability insurance can cover the expense of hiring an attorney, court costs, and settlements or judgments.

How much does professional liability insurance cost for nonprofits?

Human and social service professional calculating insurance costs for their business.

Most nonprofits pay a median of less than $50 per month for professional liability insurance, but you could pay more or less depending on your risks.

Insurance costs for nonprofit businesses are based on a few factors, including:

  • Nonprofit services offered, such as counseling or pet adoption
  • Business equipment and property
  • Revenue
  • Location
  • Number of employees

Other important policies for nonprofits

While professional liability insurance guards against work mistakes and negligence, it does not offer complete protection. No matter what type of nonprofit you run, injuries and property damage are a possibility. Other policies to consider include:

General liability insurance: This policy can pay for expenses related to client property damage and injury, such as a dog biting a visitor at your animal shelter.

Business owner's policy: A BOP bundles general liability insurance with commercial property insurance, often at a lower rate than if the policies were purchased separately.

Directors and officers insurance: D&O insurance for nonprofit organizations protects board members and officers against legal expenses if they are sued for a poor decision, such as an extravagant purchase that wasted donated funds.

Workers’ compensation insurance: Required in nearly every state for nonprofits that have employees, workers’ comp can cover medical expenses for work-related injuries and illnesses.

Employment practices liability insurance: If a nonprofit is sued by an employee over harassment, discrimination, or another violation of employee rights, EPLI can pay for legal costs.

Get free quotes and buy online with Insureon

Are you ready to safeguard your nonprofit with professional liability insurance or another policy? Complete Insureon’s easy online application today. Once you find the right policy, you can begin coverage in less than 24 hours.

Updated: March 18, 2024
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