What Does General Liability Insurance Cover for Nonprofits?
Nonprofit organizations typically need general liability insurance (GLI) to protect them from potential risks and legal issues. This type of insurance can provide coverage for third-party injuries, property damage, and even wrongful accusations.
There are a few key things to keep in mind when shopping for nonprofit insurance:
- First, the coverage should be broad enough to protect your organization from a wide range of potential risks.
- Next, be sure to ask about any specific endorsements or riders that might be available. For example, many insurers offer Directors and Officers (D&O) coverage as an add-on for nonprofits. This can provide protection for board members in the event of a lawsuit or other legal action.
Finally, it's important to find an insurer that has experience working with nonprofits and understands their unique needs.
Nonprofit Liability Insurance Coverage
It is important to understand the ins and outs of nonprofit insurance coverage so you can decide what types of coverage your nonprofit will need. Here are some commercial general liability insurance coverage types to be aware of:
Damage to personal or real property. For example, you’re hosting a fundraiser event and borrowed a friend’s expensive lawn furniture for additional seating. If the furniture is damaged during the event, you could be held liable. A GL policy would provide coverage to repair or replace the damaged item, as well as any legal costs associated with the event.
In this case, “bodily injury” refers to damage to a non-employee. For example, let’s say you run a pet adoption shelter. A visitor is bit by a dog and has to seek medical treatment. If they decide to sue your company, your GL policy would cover their medical bills, as well as any associated legal fees, court-ordered judgments, and settlements. It’s important to note that if a volunteer is injured, medical coverage would fall under your workers’ compensation insurance policy.
Medical bills stemming from accidents that happen on-premises or at a company event. So, if a delivery driver slips and falls while at your place of business, your general liability policy could provide coverage for their medical bills.
Coverage for lawsuits related to slander, libel, false arrest, invasion of property and privacy, wrongful eviction, and copyright infringement. This coverage is particularly important if you use promotional materials as part of your advertising campaign.
Losses caused by copyright violation or advertising. If your nonprofit’s logo too closely resembles another company’s, that business owner could potentially take legal action.
Employment Practices Liability Insurance
Employment Practices Liability Insurance (EPLI) is insurance designed to protect businesses from lawsuits related to the wrongful treatment of employees. This type of insurance can cover things like wrongful termination, sexual harassment, and discrimination. EPLI is a specialized type of liability insurance, and not all insurers offer it.
What Does General Liability Insurance Exclude?
General Liability Insurance (GLI) is a comprehensive liability policy that provides extensive liability protection. It’s important to understand, however, that it does have exclusions and limitations.
Like every insurance policy, your GLI policy will come with coverage limits. Most policies have a minimum coverage amount of $1 million per occurrence/$2 million aggregate. This means that your policy will pay a maximum of $1 million for each occurrence, and the maximum they will pay in a policy period is $2 million.
So, if you have four claims totaling $3 million in a policy period, the insurance policy would pay a total of $2 million. You would be responsible for the additional $1 million, or an umbrella liability policy would kick in and pay the difference.
Every GLI policy sets similar limits, which can be found on your declarations page. These limits vary from one company to the next, so make sure you understand your coverages before purchasing a policy.
Additional risks that are often excluded from GLI policies include:
- Damages due to professional services or advice (this would be covered under professional liability insurance)
- Medical bills for volunteers and employees (this would be covered under workers’ compensation)
- Employees who have been terminated
- Damage to commercially-owned vehicles and commercial real estate property
- Damage caused by intentional or malicious acts
- Damage covered under warranty issued by your company
- Business auto liability coverage may require a separate auto insurance policy
- Property insurance that covers natural disasters is not covered under your GLI policy
- A nonprofit organization with employees will need to pay disability insurance and need to know what workers' compensation covers and what this coverage protects regarding employment-related claims.
- Directors officers insurance which covers officers liability is business insurance that may not be covered.
- Data breach insurance will also need to be purchased separately.
GLI for nonprofits can be complicated. To prevent any coverage gaps, work with an insurance professional who can help assess all risks and recommend coverage that best fits your needs.
How Much Does General Liability Insurance Cost for Nonprofits?
General liability insurance premiums vary based on a company’s unique risk factors. Underwriters and actuaries set these rates based on factors including:
- Size of company and number of employees and volunteers
- Size, age, and condition of commercial property
- Type of organization and the business it conducts
- Services offered or products sold
Each company assesses risks differently and offers different coverages and limits. Therefore, the premium you pay is also influenced by the carrier you elect to partner with. Nonprofits can expect to pay an annual premium of $500 to $1000 for GL insurance.
Frequently Asked Questions
Does my company need general liability insurance?
General liability insurance is recommended for all nonprofits with considerable assets and/or real estate. Failure to purchase this inexpensive insurance could lead to a huge financial burden.
How can I save money on my general liability policy?
If you’re an entrepreneur with a small nonprofit business, you may be able to purchase a business owner’s policy. Also known as a BOP, this combines multiple coverages into one policy.
What if my general liability insurance policy limits are low?
If you’re unable to find a GL policy with limits as high as you would like, ask your agent about a commercial umbrella policy. In the event of a lawsuit, your GL policy would pay out first. Once those limits are exhausted, the umbrella policy would pick up the difference up to the limits you’ve chosen.
What is professional liability insurance?
Professional liability insurance is a type of insurance that helps protect professionals such as doctors, lawyers, and accountants from being sued for negligence or malpractice. It can help cover the costs of defending oneself against a lawsuit as well as any damages that may be awarded if the professional is found liable.
What is the Nonprofits Insurance Alliance?
The Nonprofits Insurance Alliance is a membership organization that provides insurance and risk management services to nonprofit organizations. The organization was founded in 1989 and today has over 24,000 members.
The Nonprofits Insurance Alliance offers a variety of insurance products and services, including property and casualty insurance, liability insurance, workers' compensation insurance, and group health insurance. The organization also provides risk management services, such as loss prevention and risk assessment services.
How much does auto insurance cost for nonprofits?
Auto insurance rates for nonprofits vary depending on the company and the coverage. Generally, rates are cheaper than for-profit businesses, but they can still be costly. Nonprofits should compare quotes from several companies to find the best deal.