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Top five reasons nonprofit organizations need insurance

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Interested in learning more on this topic? We've partnered with Volunteer Canada for a free webinar on August 10 on insurance and risk management for nonprofit organizations. Can't make the live session? Register anyway and you'll get the full recording by email. Register here.

1. They have Boards of Directors. A nonprofit's board of directors and officers (many of whom are volunteers) could be personally named in a lawsuit against the nonprofit alleging fraud or financial mismanagement. For example, if a board member invests the nonprofit's assets unwisely and loses everything, a creditor might sue the nonprofit as well as its directors and officers. In such a case, a Directors’ and Officers’ (D&O) Liability Insurance policy would cover the cost of defending the directors and officers and pay any resulting money damages.

2. They have employees and volunteers. Employment Practices Liability coverage (part of a Directors and Officers Liability policy) helps protect those people in the organization who are insured under the policy against damages from claims for wrongful termination, sexual harassment, discrimination and unfair employment practices.

3. They are vulnerable to a cyber breach. Nonprofit and charitable organizations face the same threat of a cyber breach as governments and big businesses yet are often not prepared to deal with the technical and financial consequences. A good D&O Liability Insurance policy automatically includes $100,000 of Cyber and Privacy coverage. The policy will cover expenses related to legal defence and will pay damages awarded to the individuals whose private and personal information was compromised. It will even pay for costs to notify the individuals whose information was compromised and costs to hire a public relations firm to repair any damage to an organization’s reputation.

4. They host special events. A Special Events policy helps protect a nonprofit organization against the financial consequences associated with event risks. Accidents happen so it’s important to ensure coverage is tailored to the activities and that the organization is properly insured in case of bodily injury and property damage caused to a third party.

5. They have offices. A General Liability policy insures a nonprofit organization against classic slip-and-fall scenarios (it's sometimes also called a "commercial general liability" or "CGL"). The nonprofit will be covered for damages that it's ordered to pay to someone (such as a visitor, customer, supplier, or associate) who is injured on the organization's property. These kinds of policies don't apply to the nonprofit's employees, who are covered separately by workers' compensation insurance.

If you have a board of directors, employees and volunteers, computers, events and offices – you need to have insurance too. Join the 80% of Volunteer Canada members who have chosen to be Under Our Wing.

Learn more about nonprofit insurance and risk at the upcoming free webinar: Insurance and Risk Management Issues for Nonprofits (Presented with BMS Canada Risk Services) on Thursday, August 10 at 10am PST / 1pm EST.

This article was written by Volunteer Canada, in consultation with BMS Canada Risk Services Ltd. Involved Canadians build strong and connected communities to create a vibrant Canada. Volunteer Canada provides national leadership and expertise on volunteerism to increase the participation, quality and diversity of volunteer experiences. Since 1977 we have worked closely with our network of more than 200 volunteer centres across Canada, over 1200 Volunteer Canada members, charitable and nonprofit organizations, businesses, educational institutions, and government departments.

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