Nonprofit Insurance: What Organizations Are Looking For

Nonprofits face the same risks and liabilities as for-profit companies and, therefore, need to safeguard their assets through the purchase of nonprofit insurance.

Just think about it: A nonprofit functions through a number of different people—staff, board, volunteers, donors, strategic partners, etc. With the number of working bodies inside and outside of the organization, it poses the potential risk of accidents and liabilities. But the question is… is your nonprofit properly insured?

In a brand-new NAPCO Research and Philadelphia Insurance Companies report, “Challenges, Opportunities and Insurance Buying Trends in the Nonprofit Industry,” we examined what factors go into choosing which nonprofit insurance to buy.

Accidents Can Happen at Any Given Time

If you think that your nonprofit is safe from accidents, think again. Think about the number of things that your organization does on any given day. Here are some examples about what could happen:

• A patron slips on the floor of a museum or at a fundraising event. 
• A child breaks her arm during an afterschool fitness camp. 
• At a free clinic, a patient accuses his doctor of malpractice. 
• A third-party vendor that hosted a foundation’s website experienced a security incident. 
• Supporters who donated to the organization may have had their names, dates of birth and credit card information accessed. 

No matter what your nonprofit’s mission is, accidents can happen and pose a great threat to your organization.

How Nonprofits Are Choosing Insurance

When choosing insurance, what’s very important to nonprofits are how understandable the policy is (52%), breadth/depth of coverage (48%) and price (42%). On average, nonprofits evaluate three companies before selecting a policy that best fits their needs.

For nonprofits that are researching new insurance providers, they do it by word of mouth/colleague referrals (36%), peers in network groups (34%) and face-to-face meetings with insurance sales representatives (31%). Nonprofits value personal, one-on-one connections to establish an insurance policy that works for them.

Researching and finding an insurance policy is no easy feat; in fact, it’s quite complicated and hard to understand. The challenges in purchasing insurance are the price, understanding the difference between the different insurance policies, the complex application process and finding the right documentation that explains the policy.

When choosing an insurance provider, nonprofits need to strategize and do their research before making their decision. It’s important to find a provider who takes the time to understand what your nonprofit is looking for, what kind of coverage your nonprofit needs and how much your nonprofit can budget. More than anything else, your nonprofit needs to find a provider who can also be a partner in helping your organization prevent and/or mitigate the risks of liabilities.