General Liability Insurance
A general liability policy insures your nonprofit organization against classic slip-and-fall scenarios. (It's sometimes also called a "commercial general liability" or "CGL" policy.) Your nonprofit will be covered for damages that it's ordered to pay to someone (such as a visitor, customer, supplier, or associate) who is injured on the organization's property. These kinds of policies don't apply to the nonprofit's employees, who are covered separately by workers' compensation insurance.
Directors & Officers Insurance (D&O)
SEE ALSO: VOLUNTEER PROTECTION ACT OF 1997
Director's and Officers insurance (D&O) is protection against a breach of "duty" by the directors and officers. D&O pays for actual or alleged wrong decisions, what the policy calls "wrongful acts." Although each insurer defines coverage in its own way, D&O insurance generally includes: "any actual or alleged act or omission, error, misstatement, misleading statement, neglect or breach of duty by an Insured Person in the discharge of his/her duties."
Some examples of claims under D&O:
- Employment-related issues such as discrimination, harassment, and wrongful termination.
- Failure to provide services.
- Mismanagement of assets.
D&O does not pay for bodily injury or property damage. You buy auto insurance, workers' compensation, and general liability for such claims.
Whether you own or rent the space your nonprofit occupies, consider what your organization might lose in the event of a fire, earthquake, vandalism, storm, or similar event. Then, buy property insurance that covers those risks, making sure it covers not only the building (if your organization owns it) but any:
- fixtures (such as lighting systems or carpeting)
- equipment and machinery
- office furniture
- computers and accessories (monitors, CD-ROM drives, modems, printers, and so forth), and
- inventory and supplies.
Most basic policies will cover these items -- but at what dollar amount? Make sure the policy covers the cost to actually replace the property, instead of paying its market value as a used good immediately before the damage.
Ask your agent or broker to carefully explain your deductible (how much your organization will be out of pocket before the insurance kicks in) and what types of losses or property damage will not be covered under the policy. For example, flood insurance is usually sold separately. And your organization may have to pay extra to have theft coverage included.
Professional Liability Insurance
Similar to D&O coverage, professional liability coverage (also sometimes called "errors and omissions" or "malpractice" insurance) protect against liabilities resulting from mismanagement of the organization, as well as workplace-related claims such as discrimination or sexual harassment. It covers not only directors and officers but also staff, volunteers, and the nonprofit organization itself.
Resources & Further Reading
VolunteerAlive.org: Insurance Basics for Nonprofits
Nonprofit Association of the Midlands: Directors & Officers Insurance