The Right Insurance for Nonprofit Organizations and Associations

General liability insurance for nonprofit organizations addresses the most common risks facing your nonprofit. With it, your leadership and the long-term health of your organization are protected from the high costs of unexpected lawsuits. 

General liability insurance is often required of lease agreements, whether renting or owning property. This insurance protects against common claims a nonprofit organization faces, including: 

• Bodily Injuries
• Third-party property damage
• Advertising injuries
• Defense costs arising from lawsuits related to covered claims

General liability insurance protects your nonprofit from accidents and unfortunate circumstances. However, it’s important to know it’s not a cure for everything. Here’s what it doesn’t cover: 

• Workers’ compensation injuries
• Intentional injuries
• Employee discrimination lawsuits
• Fraud
• Security breaches that fail to protect sensitive information

You may need to explore adding additional liability coverage for volunteers and other nonemployees performing tasks on your behalf. You also may need additional coverage for booking a special event at a particular venue, such as a fundraising event.

Workers’ compensation insurance not only protects your employees, but also your nonprofit from workplace injuries. In most states, it is legally required for employers to provide this kind of insurance. Being a nonprofit does not exclude you from this need — if you have workers, you will have to have this. 

In Oklahoma, organizations with over five employees who are not related by blood or marriage are required to have a workers’ compensation policy. While there are exceptions for this coverage, most nonprofits and associations will need to carry it. 

Workers’ compensation insurance is one of the most substantial methods to protect your nonprofit. No one likes to think of workplace mishaps, but they can happen. When they do, they are costly. Workers’ compensation insurance can help protect nonprofit organizations from the high costs of medical expenses and lawsuits associated with workplace injuries and illnesses. 

Even if you’re not legally required to have this, you should have it anyway. The following circumstances lcould bankrupt your organization if you don’t have the proper coverage: 

• Medical care for work-related injuries
• Replacement of lost wages due to injuries or illness
• Death benefits paid to the family of workers who died from a work-related injury
• Compensation for disabilities stemming from an on-the-job injury or illness
• Retraining costs for workers who are unable to return to their original job due to work-related injury or illness

Workers’ compensation in most states does not cover volunteers or independent contractors who file a 1099. Explore Oklahoma’s guide to workers’ compensation for more details. 

Professional liability insurance for associations or nonprofits is also referred to as errors and omissions (E&O) insurance. While only a handful of professions and industries need E&O insurance in Oklahoma, adding this coverage to a general liability policy can be extremely beneficial.

What makes E&O insurance coverage different from general liability and Directors and Officers (D&O) insurance is that it covers the entire organization and its employees for alleged professional negligence. Unlike other insurance offerings, it can cover errors and omissions related to: 

• Marketing or advertising materials
• Administrative oversight
• Fundraising
• Professional recommendations

Should your nonprofit organization make a mistake, this insurance will help pay for legal expenses related to that mistake. It also helps pay for negligence, discrimination, and libel suits.

Directors and officers insurance for nonprofits and associations is also referred to as D&O insurance. It protects the directors and board members of your nonprofit. While D&O insurance is not required for Oklahoma nonprofits, it can drastically benefit your organization by protecting its leadership.  

While the principles between E&O and D&O insurance are similar, this form of professional liability coverage seeks to protect the organization’s directors and families. While E&O seeks to cover suit costs stemming from negligence, D&O insurance covers malfeasance, such as: 

• Fraud, misuse of funds, or budgetary misrepresentation
• Physical or intellectual property theft
• Breach of duty that harms the organization
• Willful violation of a non-disclosure agreement or non-compete agreement
• Lack of compliance with federal, state, or local labor laws

While no one likes thinking about this, a D&O policy will protect your nonprofit or association from the ramifications of severe wrongdoing. At the end of the day, this type of risk management ensures that your organization has the longevity needed to serve and support your community.