Types of Nonprofit Insurance

Cersai Stark

Cersai Stark

A single significant and unanticipated expense might plunge an organization into financial ruin. This likewise can lead to substantial risks in the absence of nonprofit insurance. By and large, most philanthropic organizations have undersized finances. Hence, the task of minimizing the risk they confront poses a great challenge.  

In this article, we will consider the types of nonprofit insurance for charity organizations and their inherent benefits. 


Nonprofit insurance
Nonprofit insurance


  • Although nonprofits are not created to earn a profit, there is still a need to take precautions to safeguard assets and the organization against damages and liabilities 
  • Auto Insurance should be a definite requirement if the staff or volunteers operate the company’s vehicles 
  • Property insurance should constitute a must-have for organizations that own properties, such as equipment or office buildings


What is nonprofit insurance and why is it important?

Simply put, nonprofit insurance is a contract between a nonprofit organization and an insurance provider. The implication is that the latter undertakes to pay for any monetary losses resulting from liabilities and damages sustained by the former. However, the insurance provider will only provide coverage for the specific risks listed in the policy, such as work-related vehicle accidents and worker injuries. As a result, the organization can stay afloat in the event of a crisis. 

Likewise, nonprofits also face the challenge of a breach. This is largely because they keep and maintain donor financial files, employee records, client data, and even volunteer data. Employment-related claims account for 85% of all lawsuits submitted. In actuality, nonprofits file twice as many D&O claims as both public and private businesses.

What are the most beneficial types of nonprofit insurance? 

Following an understanding of nonprofit insurance and its importance, we will go further to examine the most beneficial types for nonprofits. 

1. Property Insurance 

Property insurance should constitute a must-have for organizations that own properties, such as equipment or office buildings. Significantly, this type of nonprofit insurance protects against unanticipated occurrences like fire, hail, wind, theft, and more. 

All things considered, a nonprofit should evaluate all material possessions and the unlikely destruction that can occur in the event of a crisis or accident. Similarly, nonprofits should consider purchasing renter’s insurance for rented office spaces. Above all, be sure to confirm that the policy covers more than just the land and building when looking for property insurance.

2. General Liability Insurance

General Liability Insurance protects a nonprofit organization from common slip-and-fall situations. This type of insurance is also known as “Commercial General Liability” or a “CGL” policy. Under this policy, a nonprofit will be protected from any damages to compensate for injuries suffered by a visitor, client, supplier, or associate while on its premises. 

However, employees are not covered under this insurance policy; instead, they are insured individually by workers’ compensation insurance. 

Most nonprofit operations largely rely on vendors and volunteers. In the same vein, the surge of visitors on a nonprofit’s premises or at an off-site location raises the likelihood that some incident may occur. Vis a vis, General Liability Insurance provides the needed response to the accident or injury. 

3. Auto Insurance

Evidently, this type of nonprofit insurance is most often overlooked by institutions. Yet, organizations are responsible when their employees or volunteers use a vehicle for any charitable activity. 

Auto Insurance should be a definite requirement if staffs or volunteers operate the company’s vehicles—including their own—in the course of their work. In fact, some states insist that organizations get a certain minimum level of insurance. Auto insurance covers damages incurred by a driver to other people or property while operating a company vehicle. 

4. Product Liability Insurance

Essentially, consider purchasing product liability insurance if your nonprofit sells things to the general public. This helps to shield your organization against claims brought by clients who allege they were injured by a dangerous or subpar product. Basically, this insurance pays for the legal defense as well as a sizeable percentage of the damages. 


Although nonprofits are not created to earn a profit, there is still a need to take precautions to safeguard assets and organizations against damages and liabilities. To learn more, you may choose to talk to an insurance broker or agent about your organization’s unique insurance needs and risk exposure.

Please share your comments and suggestions with us at the bottom of this post. We would love to hear from you.

Trending Post

Trending Posts

Recent Post