By Phil Wightman CEO of SteelBridge Insurance Services
When you’re a non-profit organization purchasing insurance coverage, it’s important to understand in detail what you’re receiving and why. Insurance in general can be a minefield of myths and misunderstandings. Plenty of people in charge think they have coverage that they don’t, and many think they’re financially liable for something that they’re actually paying to be protected against.
Let’s debunk some of the biggest myths about non-profit insurance coverage.
- You’re Invincible
We’ll start with the biggest one of all: “Non-profits are invulnerable to liability and lawsuits.” It’s time to banish this misconception, pronto—non-profit insurance coverage isn’t just beneficial, it’s an absolute must. Since non-profits usually work on slim margins for the good of a community cause, even a small slip-up or accusation can spell their end.
And just who might put your non-profit’s monetary future in jeopardy? Former and current employees and volunteers, random third parties who are harmed or in some way disturbed by the organization’s operations, beneficiaries (yes, the very people meant to be helped), donors who contributed to your cause, and even members of the government, to name just a few. And the scariest part is that they don’t even need to have good reason or a solid allegation; even a breezy court case in your favour can still require you to foot a substantial legal bill.
- There’s One, Catch-All Type of Insurance That Will Cover You
Countless places, including our own website, will point you to how important and useful general liability insurance is. And make no mistake—it is.
But don’t let that word “general” fool you into thinking this great “primer” insurance protects you from everything. General liability insurance mainly covers bodily injuries that your employees or volunteers cause to others due to negligence, or damage that your employees or volunteers inflict to others’ properties.
Perhaps this seems like a safe one-off purchase, but unfortunately, non-profit organizations face a variety of risk factors, and general liability insurance covers you for just a small handful of the more common ones. Is it a good place to start? Absolutely. And a good place to call it a day? Not so much.
- D&O Covers EPL (and Other Terminology Mishaps)
Do not confuse your coverages.
We’ll admit it. In the insurance world, there’s a lot of broad, technical jargon abridged into quick abbreviations, and it can all sometimes sound like one thing when it really means another.
Take, for instance, Directors and Officers Insurance. This is coverage for situations where the people handling your non-profit’s financial and operational decisions may commit an error, omission, miscommunication, or other form of neglect, which may come to light during an audit from the IRS.
Commonly, the people who are going to take the legal offensive in such a situation are those who stand to benefit from your non-profit’s smooth operations and suffer from its mistakes—think shareholders, if you have them, customers, or clients.
This is not the same thing as, say, Employment Practices Liability Insurance, which instead covers the people in charge under circumstances where employees say they were harassed or wrongfully terminated.
This is just one of the more common confusions when it comes to non-profit insurance coverage, but it’s worth noting that a good broker will never let such a mix-up go unnoticed. Purchasing coverage needs to involve more than just selecting the initials that you know are popular among non-profits—it should be specifically assessing your risk factors and understanding why this coverage or that is most important to your organization.
For additional information, please contact Phil at firstname.lastname@example.org or 888) 647-4777