Like any other type of business, a nonprofit must maintain certain types of insurance. However, these companies also often have components that others do not. That can cause confusion when it comes to what insurance is a necessity and what is a nice-to-have addition to coverage. Delving into nonprofit insurance requirements can help create clarity out of the confusion.
You are required by law to maintain certain types of insurance coverage for your nonprofit organization. These primarily target liability and can vary depending on where your company is located and conducts its business.
For example, in many places, you are required to maintain general liability insurance on any business. If your company owns and operates vehicles, then an appropriate auto insurance policy must be in effect. Each state has its own requirements for worker’s compensation coverage, but most mandate it for businesses with a minimum number of employees. Officers and volunteers may count toward those numbers.
Extras That Increase Protection
There are some other coverages that you may want to include in a comprehensive insurance package. A few of them include coverage against:
- Improper employment practices
- Cyber liability
- Property damage
- Volunteer dishonesty
Since there can be some ambiguity about coverage requirements, it is best to work with a trusted financial advisor and insurance agent to determine the exact needs of your organization.