Nonprofit Insurances to Consider; Two Recommendations from KMRD
More than 2 million individuals work at US nonprofit organizations as they strive to make a meaningful difference in the lives of vulnerable clients who may have nowhere else to turn. Given the importance of their work, nonprofit insurances are a critical component to their long-term viability.
Nonprofit organizations should generally purchase the same types of insurance purchased by commercial organizations. Of course, some types of nonprofit insurances will depend on the scope of the nonprofit organization’s activities. If, for example, a nonprofit has an auto fleet, then it makes sense to secure an automobile insurance policy. Coverages such as property and casualty, general liability, and professional liability should also be considered.
There are two types of nonprofit insurances that merit special consideration by most nonprofit organizations:
Directors & Officers (“D&O”) Insurance: Most directors and officers find fulfillment and purpose by joining board seats in nonprofit organizations. However, these same individuals who are so generous with their time and talent can be set up to assume significant risk:
- 63% of nonprofit organizations reported a Directors & Officers (D&O) Liability claim in the past 10 years.
- 85% of the claims filed were employment-related.
- D&O claims are filed twice as much in nonprofit organizations than in private companies.
Because board members and officers can be held financially responsible for actions taken by, or against the organization, employees and other board members, D&O Insurance for nonprofit organizations merits careful consideration.
Sexual Misconduct and Molestation Liability Insurance: Even after thorough employee and volunteer screening efforts, the wrong person can occasionally still be placed in contact with vulnerable clients. Should an abusive event occur, legal expenses can overwhelm a nonprofit organization. With internal resources already stretched to their limit by limited budgets and great need, the organization’s mission and ability to care for at risk clients could be threatened. Therefore, making sure nonprofits are covered against this type of risk is critical.
Like all risk, the risk of lawsuits filed against nonprofits can be mitigated but never erased. Account representatives at KMRD are set up to analyze the risks facing your nonprofit organization and review your coverage.
KMRD is a strategic partner and outsourced risk manager ready to help nonprofit organizations manage risk through insurance and risk programs backed by our disciplined approach, proven processes, dedicated service team, and our collaborative risk management portal.
Contact us below to have a KMRD expert review the status of your nonprofit insurance.
Note: This content is provided as general background information and should not be taken as legal advice or financial advice for your particular situation. Make sure to get individual advice on your case from a KMRD risk professional before taking any action.