Protect your non-profit organization against claims of negligence, errors, or omissions with a tailored liability insurance policy.
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Insurance for non-profit and charities
Non-profits are known for being advocates for helping great causes. Their charitable work is appreciated by the communities they serve, and the impact of their service is felt far beyond their locality.
However, non-profit organizations and charities are not immune to potential claims or lawsuits despite their good intentions. These organizations can be susceptible to similar risks that for-profit businesses may face, such as third-party bodily injury or property damage and even allegations of negligence in their professional services.
We’ve answered the top questions below to make sure you understand how non-profit insurance can help your business.
What is non-profit insurance?
Non-profit insurance is a combination of various commercial insurance policies that are packaged together specifically for the needs of charities and other non-profit organizations. This insurance can financially cover the organization for liable events and damage to owned property.
What does it cover?
A non-profit insurance policy can be customized to suit an organization’s particular needs. However, in most non-profit policies, you can expect the following coverages:
- Commercial general liability (CGL) insurance: Any business or non-profit organization can be held liable for accidents or events that can happen in the day-to-day running of a business. Consider a third party that slips and hurts themselves during a charity event you’re hosting. In this case, you could be held liable for their related medical bills. If you have a CGL policy, you may be financially covered for those bills. With CGL, you can also be covered for liable events such as accidentally causing third-party property damage.
- Directors and officers (D&O) liability insurance: If you have an executive committee or a board of directors, these members can be held individually accountable for their actions. D&O liability insurance protects your past and current board members (and their personal assets) if they’re alleged in a claim to have violated their fiduciary responsibilities. For example, suppose a board member is alleged to have made a misleading statement about the company that granted them access to extra government funding, resulting in a lawsuit against the board member directly. D&O insurance could provide financial protection for the legal fees associated with the lawsuit and settlement fees.
- Professional liability insurance: Many non-profit organizations provide their support through professional advice. If your organization offers professional advice that others rely on, you can be held liable if the advice is inaccurate or you were alleged to be negligent. For example, say your business provides free financial support to low-income families, and it’s alleged that your advice caused a third party to lose their savings. Even if you think this isn’t true, you could be taken to court. In this case, professional liability insurance can provide coverage for the legal defence fees.
- Commercial property insurance: If you own or rent the space where you conduct business, commercial property insurance can provide protection should that location be damaged due to an insured event, such as a fire, vandalism, or theft. For example, say you conduct the majority of your work out of an office in a strip mall. One of the adjacent units catches fire and causes severe smoke damage to your office space. Commercial property insurance may cover the professional cleaning costs, smoke odour removal, and damage to business equipment.
- Abuse liability insurance: This coverage protects employees and volunteers of an organization against claims and lawsuits alleging an act or threat of sexual, physical, or mental harassment, abuse, or misconduct. Suppose an employee is alleged to have physically threatened a third party. Abuse liability insurance can cover the defence costs and the settlement fees.
- Cyber liability insurance: This coverage provides financial protection for confidential data stored on your computers and servers if it is compromised. Say an accidental data breach left your clients’ data vulnerable to hackers. Cyber liability insurance could provide financial support for your legal costs and damages related to data breaches, repairs and restoration of your computing systems, and credit monitoring for your affected customers.
- Legal expense insurance: If you don’t have an internal legal team, consider adding this coverage to your policy. Legal expense insurance provides your organization with access to legal advice from an experienced lawyer. It can cover the cost to retain a lawyer to deal with a specific set of common issues.
Do non-profits need insurance?
Here are elements of your business model that can make you susceptible to claims and lawsuits. If any of these apply to your business, ensure you have a comprehensive insurance policy:
- You have an office space, or you visit your client’s office spaces or homes
- You have staff or volunteers who conduct business off-site
- Your work involves collaborating with third parties, including volunteers, vulnerable persons, and vendors
- You host special events
- You store important or confidential data
- You, your employees or your volunteers provide advice or offer services
- Your business has a board or an advisory
How much does it cost?
The cost of each non-profit insurance policy varies depending on the specifics of your business. For an example of how much you can expect to spend, a commercial general liability (CGL) policy for a small organization with a $2 million limit will cost approximately $450 a year.
When you get a quote from 2autoinsurance, these are some of the main factors we’ll ask you about your business that helps us calculate the cost of your insurance policy:
- Training and experience
- Company size and location
- Annual and projected revenue
- Services provided
- Number of employees
For a D&O insurance quote, the number of board members and a list of assets and liabilities would be considered pricing factors. Generally, D&O insurance starts at $750/year.
We want to ensure you get the best price when you quote with us. We’ve partnered with more than 50 of the biggest insurance companies in Canada so that we can offer you the most exclusive rates.
Common claims scenarios
Problem: Your non-profit hosts an annual sporting event for children. During an egg-and-spoon race, a participant falls and loses two teeth.
Outcome: The child’s family sues your organization for bodily injury. Your commercial general liability insurance covers the legal fees and medical expenses, totalling $18,000.
Problem: Your organization offers a hotline for the mental health of teens. After talking on the phone to one of your volunteers, a teen commits a crime and claims your volunteer psychologist told them to do so.
Outcome: The teen’s family sues your organization, alleging malpractice and negligence. You end up winning the lawsuit, but you must pay $30,000 in legal expenses, which is subsequently covered by your professional liability insurance.
Problem: A member of your board is found to have mismanaged government-granted funds, resulting in a public scandal. They are personally named in a lawsuit for breach of fiduciary duties.
Outcome: Your directors and officers insurance covers the legal expenses and settlement fees, totalling $120,000.
Frequently asked questions
What is the difference between Public Liability Insurance and Commercial General Liability Insurance?
The primary difference between Public Liability Insurance and Commercial General Liability (CGL) insurance is the risks they cover. Public Liability Insurance provides financial coverage against the public’s claims against your business for personal injury or property damage. CGL is a more accessible form of insurance that provides a more extensive range, covering personal and advertising injuries and everything public liability covers.
Not all non-profit insurance policies automatically include coverage for volunteers. The level of risk varies across roles (i.e. administrative vs. frontline) and may require different coverage levels. Review your policy with a broker to understand whether or not your coverage extends to those donating their time to your organization.
Yes, both corporate and non-profit board and advisory members are required to exercise their fiduciary duties in the best interest of the business or organization. Board members have a responsibility to uphold the three levels of fiduciary duty: duty of care, duty of loyalty, and duty of obedience. While a shield law may protect a board or advisory group, individual members can be held personally liable for breach of these duties in both corporate and nonprofit settings.
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You’ve dedicated your career to helping great causes. You deserve a broker dedicated to helping you feel great about protecting your organization.
At 2autoinsurance, we make it easy to understand the coverage you need and the available policies to protect your business. It takes just five minutes to get a quote, and the process is transparent and straightforward – so get started today! If you have any questions along the way, our team of brokers is always available to help.