Nonprofit organizations play an essential role in our society. Although both small and big businesses have provided us the comforts and productivity we enjoy in this country. America's nonprofit organizations are in the forefront in battling society's most urgent and pressing problems - drug addiction, homelessness, illiteracy, crime, and violence. Moreover, nonprofit organizations care for our most vulnerable citizens - the young, the sick, and the aged.
It is important, therefore, that nonprofit organizations have key insurance protection so that unforeseen circumstances cannot disrupt the delivery of their services. To this end, at least four types of insurance protection are essential:
Commercial General Liability Commercial general liability protects the organization from a wide variety of exposures. This insurance will cover legal obligation arising out of injuries or damages suffered by members of the public, customers, tenants, and others.
Property insurance Property insurance covers most types of property owned or used by the organization. This applies to furniture, machinery, equipment, merchandise held for sale, office supplies, and other such items. Leased property may also be covered under this section, but only if the organization has a contractual obligation to insure it and it is not otherwise insured under the coverage of others.
Workers Compensation Under workers compensation, the organization is responsible for the costs of any employee injuries that arise out of any employment related injury regardless of fault. Workers compensation is intended to provide financial relief for injury, illness, and death that result from workers performing their jobs or being on the job. It is not a substitute for regular medical insurance, life insurance, or disability insurance.
Directors and Officers Liability Directors and officers liability coverage protects the organization and board members from suits alleging financial loss from wrongful acts or bad decisions. This coverage, which includes the cost of defense, should be a part of your risk management for your organization and board.
It is important to be mindful of the exclusions in each of these policy forms.
Organizations with these types of insurance protection will have taken the necessary steps to maintain their critical work against unforeseen risks.
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