Certainty in Uncertain Times
A Nonprofit’s Guide to Risk Management and Small Business Insurance

Chapter 5: Resources for Nonprofits

Chapter 5: Resources for Nonprofits

Non-Profit Insurance FAQ

Looking for some quick-and-dirty answers? Here’s a quick recap what we’ve covered in this guide.

What is a liability?

These are legal responsibilities your organization faces. Accidents, injuries, and failures to fulfill these responsibilities can trigger a lawsuit against your NPO.

What liabilities do nonprofits face?

Liabilities come in all shapes and sizes. You can be liable for employee accidents, injuries that happen at your property, professional mistakes employees or volunteers make, and bad decisions from your board members.

Does the law protect nonprofits and for-profit companies in the same way?

As a corporation, your organization protects you from being personally sued. This corporate status shields you from personal liability the same way it would a for-profit company.

Are there special liabilities that only nonprofits have?

Yes, many. Your board can be sued for mistakes that cause the organization to lose its 501(c) status. Having volunteers also opens you up to more liabilities.

What insurance policies do non-profits need?

Depending on your budget, the kind of work you do, whether you have any employees, and the kinds of contracts you’ve signed, you could need a variety of insurance policies. These include: Property, General Liability, Directors and Officers, Errors and Omissions, Workers’ Comp, and other insurance coverages.

What is an audit and how can nonprofits avoid them?

Audits are an intense process in which you have to supply documentation to back up your tax returns and financial statements. The IRS may audit you from time to time, or you may be required by your state government to undergo independent audits. You can avoid audits by having experienced professionals prepare your tax documents and by avoiding questionable joint ventures with for-profit enterprises.

What risks do volunteers bring to the table?

Because volunteers are protected under the Volunteer Protection Act, your organization assumes their liability (i.e., you can be sued for their actions). Reduce your risk of lawsuits through training, providing manuals and legal documentation, conducting evaluations, and implementing other volunteer management techniques.

What do non-profits need to know before they buy insurance?

Look for top-rated insurance companies that have agents who specialize in nonprofit insurance. Each insurance policy can have many “customizable” add-ons, so make sure you know what you’re getting in terms of coverage, exclusions, and deductibles.

What’s the difference between buying insurance from a broker and an insurance company?

Brokers simplify the purchasing process. The agents at insureon hand compile insurance quotes based on your risks, allowing you to make a confident decision about your policies. Purchasing directly from an insurance company is more labor-intensive, and it’s harder to know when you’re getting a good deal.

What do non-profits need to know about the ACA healthcare requirements?

You won’t need to insure your employees if you have fewer than 50. You will have to have health insurance for yourself and your family, and you’re subject to fines if you don’t have adequate coverage.

When should you purchase or update your small business insurance policies?

As your business expands, changes its services, hires new employees, or signs contracts, you may need to purchase new insurance policies or upgrade your old ones.

Next: Conclusion

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