Charity Insurance Policy Information
Charity Insurance. Charities are subject to the same level of scrutiny and bureaucracy as commercial businesses. Just like company directors, trustees and charity managers are legally responsible for their charity's activities; from finance to health and safety, volunteers' welfare, to the promises a charity makes.
For this reason, they need insurance to provide cover against various risks. An accident involving a visitor at a fundraising event, or an allegation of wrongdoing against a volunteer injuring themselves while working for the charity could have disastrous consequences.
Few charities have the financial strength to pay the costs, damages and any awards made against them in the event of a claim. charity insurance provides protection against these scenarios, giving you the peace of mind that if something unexpected happens, your organization is covered.
Charity insurance protects your non-profit or social service organization from lawsuits with rates as low as $27/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked charities insurance questions:
- What Is Charity Insurance?
- How Much Does Charity Insurance Cost?
- Why Do Charitable Organizations Need Insurance?
- What Type Of Insurance Do Charitable Organizations Need?
- What Does Charity Insurance Cover & Pay For?
What Is Charity Insurance?
Charity insurance is a type of insurance coverage specifically designed for non-profit organizations and charities. It provides protection for the charity's assets, employees, volunteers, and operations against potential risks and liabilities. This can include coverage for property damage, theft, liability claims, employee injuries, and other related risks.
Charity insurance is designed to help charities mitigate their exposure to financial losses and ensure their continued ability to serve their communities.
How Much Does Charity Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small charities ranges from $27 to $59 per month based on location, services offered, payroll, sales and experience.
Why Do Charitable Organizations Need Insurance?
Charitable organizations need insurance for a number of reasons:
Protection from Liability Claims: Charitable organizations often host events, work with volunteers, and provide services that could expose them to liability claims from third parties. Insurance can provide protection from these claims and help cover the cost of any legal fees and settlements.
Property Damage: Charitable organizations often own or lease property, and insurance can protect them from financial losses due to property damage or theft.
Employee Coverage: Charitable organizations often have employees and volunteers, and insurance can provide protection for them in case of injury or death while on the job.
Data Breach: Charitable organizations may collect and store sensitive information, such as donor information, and insurance can provide protection in the event of a data breach.
Income Protection: Charitable organizations often rely on fundraising activities to generate income, and insurance can provide protection in case of a loss of income due to an unexpected event, such as a natural disaster.
Overall, insurance provides protection for charitable organizations and can help them continue their mission and provide support to those in need, even in the face of unexpected challenges.
What Type Of Insurance Do Charitable Organizations Need?
There may be certain types of insurance that your charity is legally required to take out, and there may also be optional charity insurance policies that you will choose to purchase, to ensure you're comprehensively covered, which is why it's important to do research.
The policies that you include in your charity's insurance package may be influenced by a number of factors, including the size and nature of your organization, and the work it carries out.
That said, there are likely to be a handful of risks that your charity could be exposed to, no matter what its circumstances. So, you need these basic charity insurance coverages:
General liability insurance (CGL) covers third party property damage or personal injury claims against you or your charity. With charity insurance you're covered for:
- Third-party bodily injury or property damage claims against your charity.
- Public liability at your premises and at fundraising events such as: fetes, craft fairs, walks, dinners, fun days, etc.
- Replacing third-party keys, locks and pass cards lost while in your care.
For example, if a member of the public trips over the cable that's powering your projector and breaks her ankle, your general liability insurance pays any compensation that's due, and your legal defense costs.
And if one of your volunteers spills coffee over a visitor's laptop, it's still your general liability policy that pays for its repair or replacement.
This type of charity insurance protects your buildings, contents and stock against damage from causes including fire, explosion, storm, falling trees, vandalism, escape of water, vehicle impact and theft.
Flood and earthquake are not part of a standard business property policy.
Directors & Trustees Liability
Trustees are legally responsible for a charity's activities, in the same way that directors are responsible for a business' activities.
This means having oversight of things like fundraising and donations, as well as making sure your people are looked after and that your charity complies with relevant laws.
If someone alleges your charity's done something wrong, as a trustee, it's your responsibility to defend the claim. charity insurance for trustees' insurance gives you expert legal representation and pays any fines you're liable for. You're covered for:
- Your personal liability as a trustee.
- Actual or alleged 'wrongful acts', including breach of trust, defamation and negligence.
- Legal defense costs and damages.
Professional liability, also known as errors and omissions, protects your charity if it provides services or advice. Perhaps your charity helps people start businesses, designs websites to publicize other people's events, or lists other products and services?
Giving advice or services exposes your charity to the risk of negligence claims and could mean it's forced to defend its reputation, whether or not the accusations are just.
With this type of charity insurance you're covered for:
- Protection against mistakes your charity makes.
- Legal defense costs if your charity infringes someone else's copyright.
- Coverage for damages and fines.
This charity insurance policy covers any compensation that your organization has to pay if you accidentally share someone's details with a third party, for example. Lists of wealthy donors are common hacking targets. Plus, it pays for your charity's defense costs, if that person sues you for doing so. You're covered for:
- Financial losses caused by your charity's mistakes and things you've failed to do.
- Compensation and defense costs if someone brings a data protection claim against your charity.
Many charities have employees and also will use the services of volunteers. Many states class volunteers as employees, even if they're unpaid, temporary, part-time, or simply helping out. And because they're classed as employees, their health, safety and welfare is your organization's legal responsibility.
Without workers comp, your charity or social services organization would have to pay out of pocket for lawsuits or medical bills if an employee or volunteer experiences a work-related injury or ailment. Plus it is required in most states anyway.
Equipment And Business Interruption
Equipment charity insurance covers the things your charity takes out and about, from tables and chairs to computers and display screens:
- Loss, theft or accidental damage to your charity's property.
- Damage caused by fire, storm or operator error.
It's an 'all risks' policy which, as the name suggests, means your charity's property is covered in all reasonable circumstances including theft, fire and accidents. If there is a disaster and your charity's forced to move out of its premises, business interruption cover pays for your charity to set up somewhere else.
What Does Charity Insurance Cover & Pay For?
Charities, like any other organization, can face legal challenges and be sued for various reasons. Some common reasons include:
Employment disputes: Charities can be sued by employees or volunteers for wrongful termination, discrimination, harassment, or other employment-related issues..
Insurance protection: Employment Practices Liability Insurance (EPLI) can help cover the costs of defending against such claims and any settlements or judgments that result from a lawsuit. This type of insurance typically covers legal fees, court costs, and any compensation awarded to the claimant.
Breach of contract: Charities might be sued for failing to fulfill their obligations in a contract, such as not providing services or goods as promised to donors, sponsors, or other third parties.
Insurance protection: Commercial General Liability Insurance (CGL) can help cover the costs of defending against breach of contract claims and any resulting damages. This type of insurance typically covers legal fees, court costs, and any compensation awarded to the claimant.
Intellectual property infringement: A charity could be sued for using copyrighted material, trademarks, or patents without permission.
Insurance protection: Intellectual Property Insurance (IPI) can help cover the costs of defending against intellectual property infringement claims and any damages awarded to the claimant. This type of insurance typically covers legal fees, court costs, and any compensation awarded to the claimant.
Personal injury or property damage: A charity could be held liable if someone is injured or property is damaged during an event or on the charity's premises..
Insurance protection: Commercial General Liability Insurance (CGL) can help cover the costs of defending against personal injury or property damage claims and any resulting damages. This type of insurance typically covers legal fees, court costs, and any compensation awarded to the claimant.
Professional negligence: A charity could be sued for providing inadequate or incorrect advice, leading to financial loss or harm to an individual or another organization.
Insurance protection: Professional Liability Insurance (PLI), also known as Errors and Omissions (E&O) insurance, can help cover the costs of defending against professional negligence claims and any resulting damages. This type of insurance typically covers legal fees, court costs, and any compensation awarded to the claimant.
Mismanagement of funds: Charities could face legal action if they are accused of misusing or misappropriating funds intended for specific purposes or beneficiaries.
Insurance protection: Directors and Officers Liability Insurance (D&O) can help protect board members and officers from personal liability arising from claims of mismanagement of funds. This type of insurance typically covers legal fees, court costs, and any compensation awarded to the claimant.
It's important for charities to consult with an insurance professional to determine the appropriate types and levels of coverage for their specific needs and risks. Proper insurance coverage can help protect a charity's reputation, financial stability, and ability to continue its mission in the face of legal challenges.
Charity Insurance - The Bottom Line
Charity and social services insurance is designed specifically for the sector to give you peace of mind that all your vital assets and people are covered and safe. It's important to find a competitively priced policy that offers flexibility and sufficient coverage to support the groups, communities and individuals you are involved with.
Additional Resources For Non-Profit Insurance
Find useful articles on business insurance for non-profit 501(c)(3) organizations, charities and associations.
- Animal Shelter & Pet Rescue
- Classic & Collector Car Clubs
- Fraternal Organization
- Goodwill Insustries
- Labor Union
- Parent Teacher Organization
- Public Administration
- Red Cross Chapters
- Salvation Army
- Social Work Services
- Veterans Groups
- Volunteers of America
- Youth Groups
- Specialty Community Service Organizations
- Specialty Nonprofit Agencies
The non-profit industry is an essential sector of society that plays a crucial role in addressing social issues, providing vital services, and promoting community development. Non-profits rely on donations, grants, and volunteer work to fund their operations, and any financial loss or liability can significantly impact their ability to serve their mission.
Insurance can protect non-profits from unexpected financial losses, accidents, and legal liabilities that can arise from their operations. For example, a non-profit organization may need insurance to cover damages to their property, injuries to volunteers or employees, or legal costs associated with lawsuits.
Non-profits also face unique risks such as loss of donations, damage to reputation, and loss of funding. Business insurance can help mitigate these risks by providing coverage for financial losses, reputational damage, and other non-tangible losses.
In addition, non-profits often work with vulnerable populations, such as children, the elderly, or individuals with disabilities. Insurance can protect non-profits from liabilities arising from the care and services they provide to these populations.
Overall, commercial insurance is an essential component of risk management for non-profit organizations. It helps protect the organization's financial stability, reputation, and ability to fulfill its mission and serve its community.
Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income and Extra Expense, Employee Dishonesty, Money and Securities, Computers, Valuable Papers and Records, General Liability, Directors and Officers Liability, Employee Benefits, Professional, Umbrella, Hired and Non-owned Auto & Workers Compensation.
Other commercial insurance policies to consider: Earthquake, Equipment Breakdown, Flood, Computer Fraud, Forgery, Fine Arts, Musical Instruments, Commercial Articles Floater, Computers, Cyber Liability, Employment-related Practices, Business Auto Liability and Physical Damage and Stop Gap Liability.