Why Does a Nonprofit Need Insurance?

It’s a nice thought that running a nonprofit community group for the benefit of others might allow us to circumvent certain rules and requirements so that we can get on with the job of helping others. This sadly is not the case. Even these noble organisations have to face up to the realities of doing business.

One area that nonprofits struggle with is insurance for not for profit community groups. Many remain without sufficient coverage because they are not fully appreciative of why they need insurance. Below are some of the biggest reasons why:

Reason 1: A Nonprofit has Leaders

Infographic Provided By Managed IT Services For Nonprofits Company, Connect Cause

The absence of profit doesn’t create an absence of leadership and/or a board of directors. Nonprofits can be sued, and those leaders may be named in these lawsuits for whatever charges are levelled against them. It’s at times like that where liability insurance is a much-needed thing to have, since it could cover the costs of defending any named officer in a lawsuit and even pay any resulting damages that emerged from the case.

The frequent victims of such lawsuits are often those who initially believe that there’s no way that they could be sued due to the nobility of their cause. It should be remembered that no matter how beneficial a group’s work is to no matter how big a community, there is (unfortunately) always room for a lawsuit.

Reason 2: A Nonprofit has Employees

Just as directors and leaders are exposed to the risk of lawsuits, so too are the employees and volunteers who work for a nonprofit organisation. The larger the organisation and the more people engaged, the unfortunately higher the risk of potential claims between employees, or against employees, or from employees to others. To think of that level of liability going uninsured should be frightening.

Reason 3: Nonprofits Generally Organise Community Events

As part of their fundraising efforts and/or work to raise awareness about particular community issues, nonprofits will typically organise events. These can range from simple bake sales, bring and buy sales and whatnot, to sponsored sports and full-blown black-tie gala events, to name but a few.

These events carry risks of accidents and other mishaps for which a nonprofit might be held liable. It could be bodily injury during a physical or outdoors event, food poisoning at a charity dinner…the potential is endless. Insurance will help protect the organisation against such happenings.

Reason 4: Cyber Attacks are Real

No nonprofit should think that their noble mission makes them immune to targeting by cyber attackers. Quite often, nonprofits that are believed to be righteous and just in one country can be viewed quite negatively in another, especially if their activities pertain to the politics, or the human rights issues of that other country.

Liability insurance can help cover the damage done by such attacks, which in the modern world can be truly devastating. Cyber attacks don’t just bring financial losses, but can result in the identity information of employees or clients being lost to hostile forces, which opens up more people to risk and thus the potential for legal reprisals against the nonprofit.

Reason 5: Nonprofits Have Brick-and-Mortar Facilities

Nonprofits aren’t just online or from some well-meaning person’s garage. They have offices and working locations, all of which are at risk of burglary, fire, vandalism and other damage. On top of that, accidents can happen on these properties for which the nonprofit might be held liable. Once again, it doesn’t take malicious action or intent to garner the legal wrath of another party. If a visitor were to just slip and fall because of a single moment of negligence on the part of a nonprofit, then trouble will follow.