While nonprofit organizations are created to serve a mission rather than generate profit, they still face many of the same risks as any other organization. Insurance helps protect the organization, its board members, volunteers, and assets if something goes wrong.
Not every nonprofit needs the same policies, but most organizations should consider several common types of coverage depending on their activities.
Directors & Officers (D&O) Insurance
One of the most important policies for nonprofits is Directors and Officers (D&O) insurance.
D&O insurance protects the organization’s board members and leadership from personal liability if they are accused of wrongdoing in their roles governing the nonprofit. This might include claims related to:
Mismanagement
Breach of fiduciary duty
Employment practices
Failure to follow bylaws or policies
Many experienced nonprofit board members will require D&O insurance before agreeing to serve, as it helps protect their personal assets if the organization is sued.
General Liability Insurance
General liability insurance protects the organization if someone is injured or property is damaged during the nonprofit’s activities.
This is especially important if your nonprofit:
Hosts events
Works with the public
Uses rented facilities
Many venues require proof of liability insurance before allowing nonprofits to host events or rent space.
Coverage typically protects against:
Bodily injury claims
Property damage
Legal defense costs
Property Insurance
If your nonprofit owns physical property, property insurance may be important.
This can cover:
Office buildings
Equipment
Furniture
Technology
Supplies
Property insurance helps cover the cost of repair or replacement if items are damaged due to fire, theft, or certain natural disasters.
Vehicle Insurance
If your nonprofit owns or operates vehicles, commercial auto insurance is usually necessary.
This may apply if your organization:
Owns a van or car
Transports participants
Delivers goods or supplies
Uses vehicles for program activities
Some policies can also extend coverage to staff or volunteers using personal vehicles for nonprofit business.
Additional Insurance Some Nonprofits Consider
Depending on your programs and staffing, nonprofits may also consider:
Workers’ compensation insurance (often required if you have employees)
Volunteer accident insurance
Professional liability insurance (for counseling, consulting, or medical services)
Cyber liability insurance (for organizations handling donor or personal data)
Choosing the Right Coverage
Insurance needs vary widely depending on the nonprofit’s size, programs, and assets. A small volunteer-led organization hosting occasional events may only need a few basic policies, while larger nonprofits with staff, facilities, and vehicles will require more comprehensive coverage.
Speaking with an insurance professional who works with nonprofit organizations can help determine the appropriate policies and coverage levels.