If something were to happen at one of these investor meetings, volunteer trainings, or fundraising events, would your nonprofit be protected? What if a major donor tripped and fell while visiting your office, or one of your staff accidentally damaged the wall of a venue while setting up for your event?
Like any organization, nonprofits are exposed to risk. When risk turns into reality, nonprofit general liability insurance keeps you protected. Let’s dig into what nonprofit general liability insurance is and why you need it.
What is nonprofit general liability insurance?
General liability insurance is the most common form of insurance for any organization, protecting you against costs related to third-party claims of bodily injury or property damage.
It’s sometimes referred to as commercial general liability insurance, but just because the word “commercial” is sometimes thrown in there, don’t think that this insurance isn’t for you. Accidents happen, to nonprofit and commercial enterprises alike.
When they do, general liability insurance is designed to protect your organization from costs related to liability, specifically arising out of accidents involving third parties that result in bodily injury, property damage, or personal and advertising injury.
Here are a few examples of the type of risk a nonprofit can be exposed to, and how nonprofit general liability insurance can help protect the assets of your organization:
Bodily injury: A potential donor could slip and fall while attending one of your fundraising events, then expecting you to cover the cost of their medical bills. Nonprofit general liability insurance can help pay for these expenses, along with your attorney’s fees and settlement costs if they take you to court.
Property damage: Your nonprofit animal shelter regularly hosts adoption events at local businesses, and if a few overzealous puppies damage their flooring and destroy expensive merchandise, nonprofit general liability insurance could help cover the damages.
Personal and advertising injury: Your environmental nonprofit mentions a prominent local politician in your advertising without their approval. If they sue you for defamation, you could be held liable and be responsible for paying your own legal fees.
To summarize, nonprofit general liability insurance can help protect your nonprofit from liability when someone or something gets hurt, along with paying the medical and legal costs associated with these types of accidents.
Do nonprofits need general liability insurance?
In a word, yes. As a charitable organization, you’re frequently dealing with third parties. If, in the course of your work, one of these people or their property gets damaged, you could be held liable.
It’s important to remember that “third parties” refers to more than donors or members. There are also vendors you’ll hire to work at your events, and repair and delivery people who frequent your physical locations. Even visitors, if they get injured at one of your shelters, stores, or center, can bring a claim against you.
Plus, if you ever host a fundraising event, you should know it’s common for venues to expect you to carry insurance.
“In order to get a permit to throw an event at any public park or privately owned space, you have to produce proof of insurance and the owner has to be an Additional Insured,” shared Alex Robertson, Executive Director of Cleveland-based nonprofit Recess Cleveland (and a Thimble customer).
“Normally, when you submit this request with other insurance companies, you have to wait two or three days to actually get the Certificate of Insurance. [With Thimble] we could add Additional Insureds on the fly. The Thimble app has all the functionality and offers the coverage we need, so it’s been a great help in meeting our legal requirements during popup events.”
Read more about Robertson’s nonprofit’s experience with Thimble.
A quick note on occurrence vs. claims-made policies
Nonprofit general liability policies can be either occurrence or claims-made, and it’s important for you to understand the difference.
Under claims-made policies, you’re only covered for claims made during the time when your policy is active. In other words, if a donor sues you because they were injured at an event you hosted two months ago and your policy from two months ago is still active, that policy could respond to the claim. However, if your policy expired and then next year someone tried to sue you for another injury from that same event, the policy would not respond.
With occurrence policies, on the other hand, you’re covered for claims related to accidents that occurred while your policy was active — regardless of whether the claim was made after your policy period ended.
The general liability insurance arranged by Thimble are occurrence policies, not claims-made. We believe occurrence policies do a better job protecting the insured, and that’s what we’re here to do.
What other types of insurance does a nonprofit organization need?
As much as nonprofit general liability insurance covers, it doesn’t cover everything. This type of insurance focuses on third-party liability only. That doesn’t include injuries to yourself or your employees, or damage to your own property and equipment. For that, you’ll need other types of insurance, which brings us to our next point.
In addition to general liability insurance, nonprofits may choose to protect their organization with other types of insurance as well. These include:
Workers’ compensation insurance: Often shortened to workers’ comp, this type of insurance helps pay for medical expenses and lost wages if one of your nonprofit employees gets injured on the job. Almost every state requires employers to carry this type of insurance if they have at least one employee, including nonprofits.
Professional liability insurance: Sometimes known as errors and omissions (E&O) insurance, this type of policy helps to protect your nonprofit from costs related to liability in situations where someone claims you were negligent or made a mistake that caused them a financial loss. For example, if you tutor a student for the SAT and they don’t get the score they need to get into their top college, the parents could claim it’s your fault (and sue—yikes).
Commercial auto insurance: This is an auto insurance policy for businesses. It’s a good option for nonprofits with vehicles on-hand for staff and volunteers to use. You can also purchase non-owned auto liability insurance coverage if you allow volunteers to use their own cars.
Commercial property insurance: This insurance provides coverage for damages to buildings, equipment, or inventory your nonprofit has. If your nonprofit owns a building or has installed improvements in a rented space to operate, such as a community center or headquarters office, you’ll want this protection. It’s also important to purchase if you sell merchandise, have specialized equipment, or simply want to protect your computers and basic office equipment.
Business owners’ policy (BOP) insurance: This bundles general liability insurance with commercial property insurance and business interruption insurance. Some nonprofits elect for this type of policy as it can be easier to manage and more affordable in some cases.
Directors and officers (D&O) insurance: This insurance specifically protects the leaders of your nonprofit if a lawsuit is brought against them for actions they take in the management of your operations.
Liquor liability insurance: Many general liability insurance policies include coverage for “host liquor liability” which, in the case of nonprofits, would typically apply to events where the organization is supplying alcohol, such as fundraisers and benefits. But organizations who primarily manufacture, distribute, sell or serve alcohol need an additional liquor liability insurance policy. This type of insurance protects businesses against claims arising from alcohol-related incidents causing bodily injury, property damage, legal costs, and medical costs.
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Protect your nonprofit with general liability insurance
Most nonprofits don’t have massive budgets to work with. You’re always looking to keep costs low, so you can pass on the benefits to the causes you care about. We get it.
At Thimble, all of our policies are designed to be affordable, without skimping on coverage. There’s no one-size-fits-all nonprofit, and we don’t believe nonprofit general liability insurance should work that way either. That’s why we offer ongoing monthly coverage for those who want it, as well as short-term policies that provide coverage precisely when you need it. You can purchase coverage for an hour, a day, or more—perfect for your next fundraising gala.
Interested in finding out how much nonprofit general liability coverage costs? Get your instant quote from Thimble now. It takes less than 60 seconds, and once you purchase, your Certificate of Insurance is available immediately. While you’ve giving back, Thimble’s got your back.