Why Insurance Coverage Is So Important for Non Profit Organizations
All traditional non profits have to plan their operation budgets very carefully. Being able to do a lot with limited resources enables them to advance their missions more effectively and help more people. However, they have to be careful about the way they insure their activities. Protecting themselves against potential liability makes it possible for them to protect their resources and continue their work.
Typically, liability insurance for a non profit organization is its first line of defense in the event that there is a claim against it for something such as negligence. This type of policy gives organizations coverage to pay for a lawsuit or a carrier may pay to settle the claim. Even if an organization is responsible for the wrongdoing alleged in a claim, this policy will protect it provided that the allegations fall under the scope of the policy’s terms.
When non profits are applying for funding from private foundations as well as federal grant opportunities, they may need to provide proof of general liability insurance as part of an application. Having a specific coverage limit is listed as a common prerequisite on a Notice of Funding Availability.
Ultimately, non profit boards should verify that their insurance is meeting their needs adequately. Coverage must be comprehensive but also affordable.