I just started a nonprofit…what kind of insurance do I need? Part two
Looking for part one? Read it here!
So you’ve started a nonprofit, you have everything in place, and you even saw my conversation with Tom Wertish about D&O insurance. All done, right?
Well, not quite. Directors and Officers insurance isn’t the only insurance your nonprofit will need. Tom (my friend over at Novallus Insurance) and I also talked about general liability insurance as a must-have. ALL nonprofits (and for-profits for that matter), no matter the size, location or mission, should have general liability insurance.
What is general liability insurance?
Basically, a general liability insurance policy gives coverage for others’ bodily injury or property damage. Tom is pretty adamant that ALL nonprofits need it – anytime you’re out in the world for anything to do with the company, things can happen.
Maaaaybe if a company is run by a total hermit who never goes anywhere or sees anyone, you can imagine a situation that general liability insurance isn’t needed. But, that’s definitely not common, and pretty much impossible for a nonprofit, right? Nonprofits need to be pursuing their mission and serving the PUBLIC, so it’s pretty unlikely that the hermit thing can happen.
The reality is, whenever you (or your board, staff, or volunteers) are out in the world, mistakes can happen. For example, say a church holds services each week, and a worshipper trips on the stairs on her way out. Even if the church doesn’t own the building, it can be held liable.
Tom’s recommendation: pay a little now for general liability insurance so that a freak accident doesn’t sink the nonprofit.
But none of our people would ever sue us!
This is something Tom and I hear all the time. When you start out and know all the people you’re working with, it’s pretty hard to believe anyone is going to sue the nonprofit, even if something happens.
But there’s something called “claim subrogation” to keep in mind. Basically, it might not be the person’s choice whether or not to sue. Their insurance company might be the one to make that choice, with or without their consent. It makes sense – if the insurance company is going to lose money, it’s going to try to recover that loss, no matter what you might want.
No matter how loyal and good-hearted your people are, general liability insurance is always a good idea. It’s always better to prepared for life’s not-so-pleasant surprises that might come up.
Ok, ok, I’m convinced. Now what?
Like we talked about in part one of this series, picking the cheapest quote possible is NOT the best way to choose a policy. DIY insurance can end up being more expensive and might not provide the coverage you’re looking for. If you run a dog rescue, you need to make sure your liability policy actually covers things like dog bites. So, get a good insurance agent and take the time to talk about the nonprofit’s budget and needs. Together, you’ll be able to find something that works for the nonprofit AND provides the protection it needs.
If you’d like to work with Tom (go do it, he’s the best!), learn more here.
What other kinds of insurance should nonprofits be thinking about? Check out our YouTube channel to learn more about insurance from Tom Wertish!