Nonprofit organizations have a different mission than making profit, but they are still businesses and need to take steps to protect their property and assets. Doing so requires assessing their risk exposure and the types of coverage needed. While there is no one-size-fits-all policy, we outlined seven key insurance policies that nonprofits should consider.

General liability insurance is a standard business policy that provides protection against common risks for nonprofits, such as bodily injury or property damage that may occur on their premises. In addition, it may also protect the organization from claims related to slander or libel. General liability insurance is a requirement for many grant applications, hosting events, property leases or rentals and for many contracts and partnerships. It’s a smart investment to make for any organization that is concerned about being held liable for someone else’s injury or property damage.

Directors and officers (D&O) insurance or management liability insurance is another standard business policy that protects directors, officers and the organization against negligence claims arising out of their role in managing the nonprofit. This includes claims resulting from their decisions or failure to act, breaches of fiduciary duty, fraud, and sexual harassment. It’s also a good idea to include employment practice liability (EPL) or fiduciary coverage in this type of insurance package.

Professional liability insurance is similar to D&O insurance, protecting the nonprofit against work-related claims for negligence, mismanagement, discrimination, and more. It’s important for any organization that relies on the skill or judgment of employees, volunteers, and board members. It can also include cyber liability insurance, which is essential in this day and age as data breaches are more frequent than ever.

Nonprofits should also look into commercial auto insurance for their vehicles. If the organization uses its own vehicles or rely on those of donors or other volunteers, a commercial automobile policy is a necessity. Commercial auto policies usually include personal injury protection (PIP) and uninsured/underinsured motorist coverage, which are often state requirements.

If the nonprofit sells products to generate income, product liability insurance is a must. It helps cover the cost of legal fees and compensation for customers who experience losses or injuries due to the charity’s product.

Most of these policies are available as a bundle policy, often called a business owners policy (BOP). It typically includes general liability, D&O, and property coverage in one affordable package that’s tailored to the unique needs of nonprofits. A BOP is a popular option for small businesses because it can save money compared to purchasing the individual coverages separately. To determine the best policy for your organization, consult an expert risk advisor. They can provide a complete risk assessment and guide you on the best options for your nonprofit. They can also provide a free review of your current policies and offer recommendations on new ones that fit with your organizational goals. do nonprofits need insurance