Although nonprofits operate differently from typical businesses, they still face many of the liabilities that regular companies do. Nonprofits can face lawsuits from volunteers, donors, employees, and government regulators. It can be time-consuming and financially devastating to settle the claim in court, not to mention it will ruin your reputation. Nonprofit insurance can protect you from accidents, oversights, or misunderstandings that may result in liability lawsuits. Here are the top 5 most common claims nonprofit insurance can protect you against.
1.) Contractual Disputes
Nonprofit organizations may conduct their business more casually than other businesses, coming to verbal agreements without drawing up binding contracts. Without an official contract laying out the terms of agreement, it could lead to a lawsuit if a partnership is breached. In this situation, a Professional Liability policy would help to pay legal costs associated with contractual disputes. This type of nonprofit insurance keeps you and your organization protected from civil lawsuits for negligence, common mistakes, misrepresentation claims, and more.
2.) Personal Injuries
Volunteers who work for nonprofits run the risk of being injured while they are working, just like regular employees. Even if the injuries are accidental, the organization will be held liable. Worker’s Compensation is one of the most important nonprofit insurance policies and it covers volunteers as well as paid employees. If someone on your staff is injured in the workplace, Workers Compensation will pay for medical care and lost wages.
3.) Dissatisfied Donors
Nonprofits are funded by people who believe in the organization’s cause. If donors are dissatisfied with how their money is spent they could make a claim.
4.) Employment Practices
When your staff is made up of volunteers, sometimes it is difficult to establish a clear relationship between employees and employers. Claims of harassment, discrimination, wrongful termination, failure to promote, and other similar employee-related issues are common in the nonprofit sector. Employment Practices Liability Insurance would cover nonprofits against claims that their employees’ legal rights have been violated.
5.) Financial Reporting
Nonprofit organizations must follow the laws and regulations related to financial reporting, or they run the risk of being penalized or accused of fraudulent activities. A Directors & Officers policy protects your nonprofit’s leaders in the case of possible negligence claims when it comes to financial reporting.
From churches and charities to volunteer education and health organizations, all nonprofits face risks and should invest in nonprofit insurance to protect themselves. CTG offers personalized insurance solutions tailored to your unique needs, risk level, and budget. We make the insurance buying process simple and accessible to all. Get started by scheduling a phone call, virtual, or in-person meeting with one of our experienced insurance advisors.
About the Author: Anton Thornquist
