Non Profits

There are three basic types of insurance coverage that is relevant to the operation of a nonprofit organization. Each should be considered carefully and fully discussed with an insurance professional.

• Statutory Insurance — Coverage required by law.
• Contractual Insurance — Coverage not necessarily required by law but potentially necessary because of a contract.
• Optional Insurance — Coverage that is discretionary, but may be required based on staff and operations

Statutory Insurance

This type of insurance is the basis of your coverage. In many cases, it is required by state law. Statutory insurance coverage typically includes employee benefits such as worker's compensation, statutory disability, and unemployment benefits. Some all-volunteer organizations do not require statutory coverage. However, other types of organizational insurance may be required, such as coverage for your organization's vehicles.

Contractual Insurance

Contractual insurance may not be required by law, but may be necessary due to a contractual obligation with your organization. Many grant contracts, as an example, include an insurance clause that must be satisfied to allow funding. Another example may be insurance required by a lease that your organization signs for office space. It is important that you know your contractual requirements, since the lack of coverage may prevent you from operating.  

Optional Insurance

Optional insurance can be a difficult choice, although your insurance professional can make the decision much easier. If you have risk in a certain area, such as professional liability or crime/employee dishonesty, you need to know what kind of coverage is available and its potential cost.