We find that many nonprofit organizations are so busy spending time doing good for the community, that they may not have really thought about protecting the organization from potential risks. Unfortunately, there are situations that can put all that hard work at risk.
For instance, your nonprofit’s board of directors and officers (many of whom are volunteers) could be personally named in a lawsuit against your nonprofit alleging fraud or financial mismanagement. In such a case, you’d want directors and officers (D&O) insurance to cover the cost of defending the directors and officers and pay any resulting money damages. In addition, you may need a general liability policy to cover your organization for damages that it’s ordered to pay to someone (such as a visitor, customer, supplier, or associate) who is injured on the organization’s property. These kinds of policies don’t apply to the nonprofit’s employees, who are covered separately by workers’ compensation insurance. Whether you own or rent the space your nonprofit occupies, consider what your organization might lose in the event of a fire, earthquake, vandalism, storm, or similar event. Then, you would want property insurance that covers those risks, making sure it covers not only the building (if your organization owns it) and any equipment or other assets. Each type of nonprofit is different. If you are working with children, you may need to have additional abuse and molestation coverages. If you work with a lot of cash, you may want theft coverage. As your agent, we can walk you through various potential scenarios, and help provide you coverages that make sense for your organization.
What are the insurance policies we recommend for Nonprofits?
Business Owner’s Policy (BOP)
Worker’s Compensation
General Liability
Property Insurance
Directors and Officers (D&O)
Employment Practices Liability (EPLI)
Commercial Umbrella
Cyber Liability
*In addition to these policies, we also recommend Fiduciary Insurance. To learn more about this type of coverage, give our agency a call today.
Nonprofit Insurance – FAQs
1. What types of insurance do nonprofits typically need?
Most nonprofits should consider:
- General Liability
- Directors & Officers (D&O) Liability
- Property Insurance
- Workers’ Compensation
- Volunteer Accident/Medical Coverage
- Optional: Cyber Liability, Employment Practices Liability (EPLI), Special Events coverage, and Abuse & Molestation coverage (depending on services provided)
2. What is Directors & Officers (D&O) insurance—and why is it critical?
D&O insurance protects your board members and leadership team if they’re personally sued for decisions made on behalf of the organization. This includes allegations of mismanagement, misuse of funds, or failure to follow bylaws. It’s one of the most important (and often misunderstood) policies for nonprofits.
3. Does General Liability cover my volunteers?
General Liability can cover third-party injuries or property damage caused by your volunteers, but it doesn’t cover injuries to your volunteers. For that, you’ll need Volunteer Accident coverage or Workers’ Comp (if they’re paid workers or required to be covered by state law).
4. What if we hold fundraising events or public gatherings—are those covered?
Not always. Special Events insurance is often needed for one-time events, especially if they involve alcohol, large crowds, physical activity, or third-party vendors. Some policies allow you to add events with notice; others require standalone policies.
5. What if someone sues our nonprofit over how we run things?
That’s where D&O insurance comes in again—it protects against allegations of mismanagement, discrimination in board decisions, failure to follow your mission, or wrongful termination of a staff member. Even unfounded claims can be costly to defend.
6. We rent office space—do we need Property Insurance?
Yes. While your landlord covers the building, you are responsible for your own property—desks, laptops, signage, inventory, etc. Property insurance can also cover loss of income and extra expenses if a fire or covered event temporarily shuts down your operations.
7. What about coverage for child/youth programs or elder care services?
You may need Abuse & Molestation coverage, which protects the organization from allegations of sexual misconduct or physical abuse. This is a sensitive but crucial area of protection if you serve vulnerable populations.
8. Do we need Cyber Liability if we don’t sell anything online?
Yes. Nonprofits are frequent cyber targets due to outdated systems and donor/member data. Cyber Liability protects you from breaches involving personal info, financial donations, or email fraud—whether you store data in-house or use cloud-based platforms.
9. What is Employment Practices Liability Insurance (EPLI)?
EPLI covers lawsuits related to HR issues—wrongful termination, discrimination, harassment, retaliation, and more. Nonprofits are just as exposed as businesses, and these claims often target the organization and individual managers or board members.
10. Does Workers’ Comp apply to nonprofits?
If you have employees, yes—Workers’ Comp is legally required in most states, regardless of your nonprofit status. It covers medical expenses and lost wages for work-related injuries, including office slips or fieldwork injuries.
11. Do volunteers ever need to be covered under Workers’ Comp?
In most states, volunteers aren’t covered under Workers’ Comp, but exceptions exist—especially for roles that closely mimic employee duties. Consider volunteer accident coverage or check state-specific requirements with a licensed agent.
12. Can board members be held personally liable for nonprofit activities?
Yes. Board members can be sued personally for breach of fiduciary duty, improper use of funds, or failing to act in the organization’s best interest. D&O insurance shields them and helps attract high-quality leaders who know they’re protected.
13. How can we ensure we’re not under- or over-insured?
Work with an agency that understands nonprofit operations (like we do). We’ll help assess your risks based on your structure, services, and funding model, and tailor coverage to protect your mission without stretching your budget.
