Commercial General Liability
Commercial general liability insurance is insurance that protects the organization from claims where the organization is alleged to have caused damage to a person or thing. It is "must have" coverage for the organization. The only variable is how much coverage to obtain. The standard rule of thumb is $1 million in coverage. This is considered to be the amount of coverage that is sufficient for 90% of the nonprofits and 95% of claims those organizations will face.
The general liability policy will provide both defense and indemnity in case of a judgment against the organization. If your nonprofit works with a particularly fragile or claims oriented population, then the defense aspects of the policy are particularly necessary. The legal costs to defend against frivolous claims can destroy a nonprofit. With this coverage, the insurer will retain counsel to defend against claims.
Liability insurance is typically required in commercial leases by the lessor. It is typically required by venues and organizers of events. So, if your organization will be renting a pavilion, using a ball field, renting office space, or doing any number of other activities, then this insurance is absolutely necessary.
Property insurance is coverage that protects the property owned by the organization. This kind of coverage differs from insurer to insurer and it is important to speak with an insurance professional who understands the nonprofit.
Generally, the coverage protects buildings and property from damage or loss. This includes buildings and property leased by the nonprofit and may be required by the lessor. However, what some organizations fail to recognize is that computers, files, records and other property can be insured under such coverage. The point is that the organization does not need a physical location to be able to obtain coverage. The term property can entail baseball equipment, computers, medical devices, etcetera. Confirm with your insurance professional precisely what is covered under the property policy.
Directors and Officers Insurance
Directors and officers insurance is designed to protect the nonprofit's management team against claims that the board took improper action. It is this insurance coverage that most nonprofits struggle with when considering business insurance. Most nonprofit directors and officers believe they are immune from lawsuits either because they believe the clientele or employees will not sue or because there is some belief that they are immune from lawsuits.
Nonprofit boards and managers are facing an ever increasing liability from employee lawsuits. These lawsuits can involve sexual harassment claims, discrimination, and wrongful termination claims. The claims are expensive to resolve. Another consideration for nonprofits is that uninsured board positions will be unappealing to professionals considered as potential board members. This can limit the nonprofit in attracting quality talent to its board. For these reasons directors and officers insurance should be an integral part of the nonprofit's business insurance plan.