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Four Coverage’s Every Nonprofit Should Have

Most Nonprofits operate on tight budgets. One thing Nonprofits can’t afford is an unexpected bill from a claim, especially if insurance could have been purchased to cover the expenses. Having the right insurance and agent (who understands your by-laws) can be critical to the overall success and health of your nonprofit.

Directors And Officers Insurance -- Your board of directors and officers (many of whom may be volunteers) could be sued for their actions for a number of reasons. An example might be mismanagement of the nonprofit’s investments, selection of nonprofit leadership and more. Directors and Officers insurance covers the Board, and generally the officers, of the Nonprofit for the errors and omissions while acting in the capacity as such. The coverage also provides defense coverage, which in most cases can be as much as any settlement.
 
Employment Practices Liability (EPLI) -- EPLI provides coverage for claims brought by employees for alleged or actual work place discrimination, wrongful termination, harassment, retaliatory treatment, unfair hiring practices, and other types of workplace torts or hiring discrimination. EPLI claims are becoming more frequent due to our current economic situation and litigious society. EPLI insurance also offers defense costs as part of the coverage. In addition, many policies offer free pre-claim legal service. This allows the nonprofit to call an attorney prior to employee termination to obtain legal help. This can be invaluable to the Nonprofit.
 
Cyber Risk Insurance -- You can’t pick up a paper or turn on the TV without learning about another company that had their computers hacked and confidential information stolen. If you follow these stories, you are also aware of the incredible costs associated with notification to all the individuals. Most states now have laws that require the entity to provide identity theft and notification insurance for a number of years after a cyber beach has occurred.
Nonprofits are subject to the same risks that other businesses are. Nonprofits store employee, client, and donor information in files and on computers. Non-profits also accept credit cards for purchases that increase risk. What if an employee’s laptop was stolen that contained this information? Are you prepared to manage the loss alone?
The average notification and recovery costs are now estimated at about $500 per identity. Most Nonprofits could not afford that.

Business Income and Extra Expense (BI&EE) – What would happen to your Nonprofit, if after a major fire you found out you needed to move to another location while the repairs took place? In addition, you had to reduce services by 50% because you could not operate at full capacity. BI&EE insurance provides the funds to help you recover and resume operations as soon as possible. There are two components to this coverage:
  • Extra Expense -- Covers additional expenses to help to resume operations (including rent, overtime, new phones, payroll, and other rental expenses).
  • Business Income -- Provides insurance for loss of income suffered during a loss.
Nonprofits have an exposure to lost revenue (especially if you can’t perform services). We recommend you allow us to review your coverage to make sure the limits are adequate to meet your needs.