Nonprofit liability insurance is a crucial element of nonprofit management that protects organizations from unexpected expenses. This is often the difference between a nonprofit closing its doors and one that continues to survive - and even thrive! In this article, we'll outline everything you need to know about nonprofit liability insurance, including which organizations need it, how to choose the right coverage, and the cost.
You’ve worked hard to start your nonprofit. You began with a mission and have built an organization suited to make real change. But do you have everything you need to protect what you’ve built?
That’s where nonprofit liability insurance comes in. This type of not-for-profit management liability insurance helps protect your organization from a variety of issues common to the field.
In this article, we’ll walk you through everything you need to know about nonprofit general liability insurance, including what it covers, which nonprofits need it, and the average cost.
Looking for more info? Check out this blog about the 8 types of nonprofit insurance here.
Let’s first outline why liability insurance for nonprofits is so crucial.
Nonprofit liability insurance helps protect nonprofits from legal consequences for a variety of everyday liabilities. These are things that could happen to anyone. But as businesses, nonprofits can be held liable for certain occurrences.
For example, if your nonprofit hosts an event with outdoor activities and a child gets hurt because they weren’t properly supervised by your staff or volunteer, your organization could be liable for damages.
Liability insurance protects you from unexpected expenses like medical bills, legal fees, and more. Which keeps your nonprofit financially healthy and transparent – and able to continue doing its important work!
Pro tip: In addition to securing nonprofit liability insurance, you should also have a solid contingency fund for unexpected, business-related expenses. Having a strong fundraising strategy is a great way to build this contingency fund, which will help ensure the longevity of your organization.
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There are some clear risks that all nonprofits will encounter just doing their important work, but nonprofit liability insurance can help mitigate them
Here are the risks that nonprofit general liability insurance covers.
This risk involves someone else’s property that you might lose or damage in the course of your work. General liability insurance will help cover the cost of repairing or replacing the item. It can also help cover legal fees from any resulting property damage lawsuits.
If someone gets hurt at a location associated with your nonprofit, you could be liable for damages. For example, if someone trips on the stairs at your museum and breaks their arm, you could be sued for medical expenses.
Liability insurance for nonprofits helps pay for attorney’s fees, medical bills, settlements, and any court-ordered judgments.
This occurs when you accidentally copy another organization’s advertising logo or slogan while marketing your nonprofit. Because slogans are typically trademarked, you could face some steep legal fees should the other organization pursue legal action.
Nonprofit general liability insurance covers –
Although these risks might seem rare, they do happen. That’s why it’s so important to make sure you have the right coverage for your nonprofit.
While it’s always better to err on the side of caution when it comes to insurance, some organizations simply must have nonprofit liability insurance.
Typically, nonprofits that work directly with the public are most at risk for liability. But nonprofits that have a physical space, even if it’s just an office, need liability insurance, too.
Some organizations that can use nonprofit liability insurance include –
All of these exempt organizations will benefit from the safety net of nonprofit liability insurance.
Luckily, you can usually find a good level of coverage for an affordable price.
Liability insurance pricing varies based on your potential for liability claims. For example, a nonprofit that teaches kids rock climbing would likely have a higher insurance premium than an organization that studies native plants.
Location, number of employees, and revenue can also affect your insurance costs.
However, most nonprofits can expect to pay a median of $45-60 a month for nonprofit general liability insurance.
If you’re interested in more information about nonprofit accounting, check out our guide to bookkeeping for nonprofits and our free balance sheet template.
To choose the right liability insurance provider for your nonprofit, look for companies with the following characteristics.
You don’t always need to go with a well-known company to get great liability insurance coverage, but you should ensure that your provider has good reviews.
Consider asking nonprofits with similar setups as yours who they use for liability insurance and how they feel about them.
Your liability insurance provider should absolutely have experience in the field – but they must have experience working with nonprofits, too.
Because nonprofits have unique issues and needs, it’s vital to work with someone who understands the nonprofit sector.
Your insurance agent should help you determine the coverage level you need. While you can always up your coverage later, it’s important to consider upfront how much coverage you think you’ll need.
Imagine how frustrating it would be to find that your plan doesn’t cover something when you need it!
Finally, it’s important to find insurance that your organization can afford. This expense should be a priority, but that doesn’t mean you should rush into a plan with an unreasonable price point for your nonprofit’s budget.
If you run a nonprofit, you know that there are sometimes very thin margins between closing and succeeding in your mission. When something unexpected happens, it’s important to have every possible safety net in place to make sure your organization not only survives – but thrives!
Nonprofit liability insurance helps protect your nonprofit from these unexpected legal fees and other expenses. It ensures that you’ll be able to keep up your important work regardless of any accidents or issues.
Donorbox can help you build up your financial cushion with a powerful fundraising strategy. Our tools are calibrated to help nonprofits maximize their fundraising without breaking the bank. We’ve got you covered, whether you’re –
Wherever you are on your fundraising journey, we’re here to help! Sign up today and launch your first campaign in minutes.
For more nonprofit management tips, check out the rest of our Nonprofit Blog. Subscribe to our newsletter for monthly fundraising know-how delivered straight to your inbox.
Lindsey spent years wearing many hats in the nonprofit world. Whether she was helping arts nonprofits with their messaging and content, planning a fundraising gala, writing an NEA grant proposal, or running a membership program with over 400 members, she learned how to navigate – and appreciate! – the fast-paced world of fundraising. Now, she loves sharing those hard-earned lessons with the Donorbox community.
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Lindsey Baker Bower