Whenever you budget the expenses of your business, Nonprofit insurance must be near the top of the list because you can’t always know exactly what can happen in the future.
Need General Liability Insurance for Your Nonprofit
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With the protection provided by general insurance and all the other sorts of insurance we will tell you about, you can protect your business and yourself in case something unwanted happens.
Like any business owner, for your Nonprofit enterprise, you must consider how much financial liability you are taking on.
If your Nonprofit business runs without proper insurance, you are taking an enormous chance not just of losing some money but of a final wipe-out.
This is because the laws in every state are very strict in enforcing liability on the owners of businesses for the upshots of their actions.
In this article, we are giving very general guidelines for growing businesses to explain what the main kinds of insurance that you need are, and where available, a rough guide to how much you can expect to pay.
The question is, can you afford to NOT have insurance for your Nonprofit business?
What this means, for any Nonprofit business owner, is that if some company claims that your work caused them some physical or economic damage, a court can award damages far beyond the total size of your business.
Your Nonprofit business is not protected by laws in the same way as states are, where laws can place a “cap” on the maximum level of liability.
In some states, like Texas, there are specific monetary levels that limit the amount a court can award in any case against the state.
In a court case, it’s purely the right of the jury to award whatever amount they deem appropriate, even sometimes giving a person more than they have sued for.
When you are running your Nonprofit operations, you can’t deny responsibility for the outcomes of your actions.
Even more importantly, unless you have spent in advance the money necessary to have your business running as an LLC, all of that liability belongs to you as an individual.
What does Nonprofit insurance protect you from?
For your Nonprofit business, the most important kinds of insurance are designed to cover the risks to your business from accidents, from unexpected events, and from mistakes.
Also there are some legal kinds of insurance that various states require.
In the next few paragraphs, we will explain the most important points any Nonprofit business owner should consider when negotiating the insurance needed.
The main headings of insurance for your Nonprofit businesses are liability insurance, commercial insurance, asset insurance and workers compensation insurance.
General liability insurance
Any Nonprofit business is dealing directly with members of the public, and that means you usually have the danger that some accident can happen to them themselves or else something of theirs can be damaged.
In such a case, they can sue you for compensation.
General liability insurance policy for your Nonprofit business covers you against claims coming from injury to customers or damage to their property.
It protects your Nonprofit business from the claims themselves and in addition to any follow-on court costs and legal fees of the lawsuits.
In many cases, it can also help you to qualify for extra business from city and state organizations, where contracts require proper liability insurance.
The average level of general liability insurance for your Nonprofit business would be with a upper limit of $1 million for a single event and a total of $2 million for the whole year.
See the table in the costing section below for average prices of general liability insurance for your Nonprofit insurance operations.
Professional liability insurance for your Nonprofit business
In the event where a customer alleges some negligence, errors, or omissions in how you conducted your Nonprofit business for them, you can quickly face a court case.
Even if the lawsuit against you is decided in your favor, the cost of defense can be high, and the impact on your reputation can be damaging.
Every small Nonprofit business should have enough professional liability insurance to cover an individual claim of $25,000, with annual cover of $50,000.
See the table in the cost of Nonprofit insurance section below for average prices of professional liability insurance for your Nonprofit operations.
Product liability insurance
Whatever goods you sell or advice you give about the goods, you are running a risk that clients may claim that the results didn’t meet your description of function, or that your recommendation was basically incorrect.
You need to know the explicit laws of product liability in your own state.
For example, in California, all businesses in the supply chain can be held culpable for damages caused by products claimed to be defective.
To cover yourself against any following lawsuit, you need Product liability insurance for Nonprofit
Only you can determine exactly how much insurance you must have.
Best advice is to talk to experienced insurance agents, brokers or company representatives for help.
Commercial vehicle insurance for your Nonprofit business
Beware! – practically all policies for private vehicle insurance do not cover any event like theft or accidental damage when the vehicle is being used for business purposes.
The right way to make sure that your vehicle is insured for both its own value, and the valuable contents, is by taking out a designated commercial vehicle insurance package.
Commercial truck policies insure the value of any vehicle in case of accident, malicious damage, fire, or theft.
In addition, in case of any accident, the truck itself, the content and any legal bills, medical expenses, and property damage is covered if your car is involved in an accident.
Most states, other than Virginia and New Hampshire, require this type of insurance.
The wanted value of the insurance is calculated on the depreciated value of the vehicle, and your requested level of cover of contents.
Tools and Equipment insurance
Since your Nonprofit business needs specific and expensive equipment, you will realize how much it can cost to replace it in case of any damage, loss, or theft.
The tools may be subject to malicious damage, deliberate fire, theft, other such unpredicted acts.
Also, acts of nature like lightning strikes, hurricanes, earthquakes, and other highly damaging natural events can destroy your whole business in one stroke.
Unless you can afford to immediately replace such specific gear quickly out of your own pocket, you need full-level equipment insurance so that you can immediately buy whatever needed to keep your Nonprofit business running.
It is impossible to advise how much equipment insurance you need – it’s really dependent on how much you have invested in your Nonprofit business’ equipment.
Commercial Property insurance
Any Nonprofit business that owns or rents space in a building needs a commercial property insurance policy.
If you own the building, you certainly have a substantial capital investment, along with a big liability if there’s a mortgage.
Any physical building location needs to carry insurance coverage for the value of the premises and contents against unexpected occurrences like fire and storms, and against criminal damages like theft and vandalism.
If your Nonprofit business deals in areas of high risk, like Florida or North Carolina, extra coverage may be needed for earthquakes and hurricanes or tornadoes.
In other states like Washington, where extreme cold snaps can cause damage to outer coverings of Nonprofit business premises, there is a need for more supplementary cover than in warmer climes.
Whereas the level of cover depends entirely on the value of the property, it’s not possible to say what cover your need, but we have been able in the table in the cost of Nonprofit insurance section below to give some indication of the average prices per million dollars of property insurance for your Nonprofit business.
Temporary insurance by month, week or day for your Nonprofit business
Is your Nonprofit business working part-time or casually, or is the level of business fluctuating?
Using short-term insurance makes good sense. Business insurance by the month, day, or week – temporary insurance for Nonprofit – are special policies where you can cover a designated period when you want to be covered.
By only paying for that period of cover, you will save by having lower premiums but still having the same risk cover.
The key feature of short-term insurance is that you pay for the cover for a defined period – a specific date, or a week or month starting on a specific date, for example for 30 days beginning on the specified date.
When you are expecting periods of larger business activity, get the existing cover raised.
Talk to your insurance agent, broker or the company’s representatives to see what options you have.
Business Owners Policy BOP for your Nonprofit business
You have the option to combine several of the important kinds of small business insurance in one policy that is known as the business owner’s policy – BOP.
A BOP merges commercial property and public liability insurance by amalgamating these coverages into one insurance policy, which can save you money.
BOP insurance will cover you if any claims of injury or property damage are made.
It is often the right choice for small and medium-sized Nonprofit businesses, such as yours.
There are a few limits that will rule whether BOP is suitable for your own business.
BOPs cannot cover your professional liability or commercial vehicle cover.
Also, the size of your business will dictate whether you are permitted to take out BOP cover.
The usual business that can take out a BOP policy must have fewer than one hundred employees, and under five million dollars in annual sales.
Plus, you must separately take out the mandated worker’s compensation, health and disability insurance as determined for your state.
Workers Compensation insurance for your Nonprofit business employees
In almost all states, it is mandatory to have workers compensation insurance when your Nonprofit business has one or more employees.
Workers compensation insurance covers the enterprise against any costs that arise if an employee experiences an injury or becomes sick as a result of work.
The benefits provide for medical expenses, death benefits, lost wages, and vocational rehabilitation.
Failure to meet a state’s regulations in this regard can leave you as the employer obliged to pay penalties levied by the states.
Some states, such as North Dakota, Ohio, Washington, West Virginia, and Wyoming only authorize coverage from the government-run monopoly state funds.
In these states, you may not obtain your workers compensation obligations from private insurance corporations.
Workers compensation premiums are calculated based on the employee’s pay, and usually come out at around $1.00 per $100 per month.
However, you must refer to the relevant authorities in your state.
Average costs of these types of insurance
Although every Nonprofit insurance requirement is unique, there are enough examples of average quotes from insurance companies for us to give appropriate guidelines, including what are the cheapest rates offered.
Of course, you should always check with a broker what’s relevant for your business.
The list below is of annual premiums we have researched for the main types of insurance your Nonprofit businesses needs.
|Types of insurance||Price range|
|Product liability insurance||$338 – $562|
|Commercial vehicle insurance||$1837 – $3217|
|Equipment insurance||$471 – $1247|
|Commercial insurance||$853 – $2373|
|General liability insurance||$724 – $1004|
|Public liability insurance||$392 – $649|
Cost of insurance for your Nonprofit operations depends on many different factors.
We have estimated these figures for small freelance Nonprofit businesses.
In larger states like California, premiums are generally about 20%-30% higher than national averages, but in smaller states like Utah, they usually are about 20%-30% less.
The location and size and type of your Nonprofit business can have a big effect on the cost of different policies.
You should discuss with professional insurance agents and brokers, or insurance company representatives.
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In addition you can let the internet do the work for you by searching for insurance companies near where your business is located.
Another reliable source of information is the local Better Business Bureau in your suburb.
What is small business insurance for Nonprofit operations?
This is an umbrella term used to describe standard insurance policies designed to protect Nonprofit business owners from risks like bodily injury, property damage, claims of negligence.
Does my Nonprofit business have to have insurance?
Some of the kinds of insurance are not mandatory for you to operate your business, but they can protect you from risks in your business operations.
Several other forms are required by state law, such as workers compensation and vehicle insurance.
What does a small Nonprofit business insurance policy cover?
Liability insurance provides coverage against lawsuits or claims filed by a third-party for bodily injury, property damage, or negligence.
The specific cover will vary based on your own operations.
See the table in the costing section above for average prices of the best policies for Nonprofit insurance.
How much will Nonprofit business insurance cost?
On top of the size of the business, certain other factors, such as location and claims history, are used to determine your policy’s cost.
You should consult with professional insurance agents and brokers, or insurance company representatives.