An Insurance Review

From natural disasters to frivolous lawsuits, bad things sometimes happen to good organizations. Unfortunately, the good your organization does is of little help in most of these situations.Assessing and managing risk is a board responsibility. Begin the process with some serious “scenario” planning. What might go wrong and what could happen if it does? When a risk is insurable, and many are, find out if your organization has the necessary insurance to cover it.No single insurance policy will provide all the protection your organization needs. It will probably require several different policies to ensure adequate coverage. Here are some of the most common types of insurance for nonprofits:Commercial General Liability (CGL). This insurance provides coverage for accidents involving people who are not employed by the organization, such as visitors and clients who are injured on the organization’s property.Directors & Officers (D&O). As the name implies, D&O insurance protects directors and officers when they are sued personally for things that allegedly happened in the course of their work with the organization and led to financial loss.Errors & Omissions (E&O). In the medical world, E&O is known as malpractice insurance. The focus is negligence that occurs in the ordinary course of a nonprofit’s activities. For nonprofit organizations, E&O and D&O insurance can overlap. Be clear about which risks are covered by which policy.Commercial Property. This covers damage to physical property, including the organization’s equipment, supplies, and office space, from storms, fire, and similar events.Auto. This insurance is essential if a nonprofit’s staff or volunteers drive vehicles in the course of their work for the organization.Umbrella/Excess Liability. These policies increase the amount of the organization’s liability insurance protection. As with the other types of insurance, read the fine print carefully to understand exactly what protection is provided.Specialty Policies. These are policies and endorsements that cover unique circumstances and risks. It is wise to thoroughly research any nontraditional insurance products you are contemplating to ensure they will actually cover your needs.As a final note, be sure to inform your insurance company of any changes that might affect coverage. For example, adding programs or activities or changing the structure of your organization could void a policy.