Assess the Need for Insurance Coverage

‘Tis the season generous volunteers will bestow the gift of time upon thousands of charities. Volunteers will be up on ladders hanging holiday decorations, schlepping boxes of clothes and toys, and delivering meals to home-bound neighbors.  If your nonprofit will be engaging volunteers, it is a good idea to assess your current insurance coverage to determine whether you have the appropriate coverage in light of all of the work you do, including the efforts involving volunteers.  Depending on how your volunteers are utilized, your general liability insurance or Directors and Officers insurance may not be enough.

In general, The Standards for Excellence: An Ethics and Accountability Code for the Nonprofit Sector® recommends that all nonprofit organizations “periodically assess the need for insurance coverage in light of the nature and extent of the organization’s activities and its financial capacity.”  We know that some small nonprofits decide to forego general liability insurance coverage or Directors and Officers liability insurance coverage altogether.   However, doing so is taking a significant financial risk.  The Standards for Excellence® code specifically states that the decision to forgo insurance shall only be made by the board of directors and shall be reflected in the minutes for the meeting at which the decision was made.

Did you know?  The Standards for Excellence® Educational Resource Packet, “Legal Compliance and Liabilty Issues” includes a dkiscussion on legal compliance relating to volunteers and a discussion on genral liability and Directors and Officers insurance.   This packet is free and available to Standards for Excellence Institute® members.  It is available through the members-only section of our website.  Hard copies are also available upon request. Not a member? Join now!

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