Insurance for New Nonprofits
So you’re starting your own nonprofit….
What types of insurance do you need to be concerned about?
WORKERS’ COMPENSATION
THE LAW: In California, any employer with one part-time employee must carry Worker’s Comp Insurance.
WHAT IS IT? This coverage pays for the benefits received by an employee who is injured on the job or suffers a work-related illness, regardless of fault.
HOW MUCH? Worker’s Compensation costs are on the rise, and Nonprofit employers are hit especially hard if they have volunteers. Many Workers Compensation carriers don’t even want to insure nonprofits because of the added liability created by volunteers! This is the toughest pill to swallow in the insurance arena…Be sure to budget appropriately for the cost…anywhere from $2 per hundred dollars of salary (for clerical staff) to $30+ per hundred dollars of salary (construction-type jobs). Rate increases this year are anywhere from 20-30%+…The good news is, after a couple of years of no or low claims, the “experience modification” factor declines, and rates are provided at a discount (like a “good driver”).
Click here to learn more about Workers' Compensation Insurance...
GENERAL LIABILITY
THE LAW: There is no law that states that a Nonprofit MUST carry General Liability Insurance, however, there are many contracts/agreements that you sign that may require it…Your property lease, any funding agreements/grant contracts, special event facilities, and collaborative partners…all usually require proof of General Liability coverage.
WHAT IS IT? This is a “core” coverage that provides protection against liability that YOU cause- bodily injury, property damage to a third party, and often personal injury (libel, slander). Ex: Someone slips and falls in your administrative office when leaving a meeting.
HOW MUCH? There are many variables in the cost of this coverage…It depends on the nature of your business. The smallest nonprofits pay anywhere from $500/yr, and some larger, multi-million-dollar budget organizations pay over $10,000/yr.
Click here to learn more about General Liability Insurance...
WHAT ELSE?
Directors and Officers/Employment Practices Liability — 75% of claims against nonprofits are Directors and Officers claims…Board members are held liable for the actions of their organization, and may not agree to serve on a board without the coverage in place.
Professional Services Liability — For those organizations that provide counseling services.
Sexual Misconduct Liability — For those organizations working with children.
Non-Owned/Hired Auto Liability — If your employees drive their own cars on company business.
Business Auto Liability — For company-owned or leased vehicles.
Employee Dishonesty — Provides a source of recovery for $ embezzled by employees/volunteers.
Student/Volunteer/Participant Accident Insurance — Limited coverage for injuries, no-fault.
Property — To protect the assets you own or lease.
Umbrella Liability — To increase liability limits on a variety of policies.
Schweickert & Company
15 Peters Canyon Road
Irvine, CA 92606
Direct Phone/Fax: 714-689-1772
Email: Laura@schweickert.com
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