Insurance for Not-for-Profit Organisations

Not-for-profit organisations operate in much the same way as that of for profit businesses in terms of the need to put in place an effective risk management process. A key component in effective risk management is having adequate insurance in place to protect your Organisation and its people.

What Types of Insurance Should a Not-for-Profit Organisation Consider?

The following is not an exhaustive list but is intended to describe some of the more common types of insurance that are available to not-for-profit organisations:

• Public Liability and Product Liability Insurance
  In terms of product liability insurance, if, on a day to day basis your Organisation (including fundraising) sells food or products then it may be relevant to take out Product Liability Insurance. Product liability insurance protects against claims of personal injury or property damage caused by products sold or supplied through your Organisation. It is designed to help protect your Organisation by ensuring that if this happens, your insurance will cover the costs of any injury or damage caused.Public liability insurance protects your Organisation from damage or injury caused to a third party. This is because your Organisation is accountable to third parties which it comes into contact with. If damage or an accident occurs while your Organisation is providing a service, a third party can sue your Organisation, which can result in costly legal fees as well as the obligation to pay for the damage or injury your Organisation may have caused. For example, if a person slips on a wet floor of your Organisation’s premises and sustains an injury, then public liability insurance is likely to cover this.
  
  
• Directors and Officers Liability Insurance
  If your Organisation is incorporated (either as a company or an incorporated association), the liability of its members is limited. However limited liability does not extend to protect Board Members or Committee Members from being sued for their own acts of negligence. For that reason, it is important to consider this type of insurance.
  
  
• Contents Insurance
  This type of insurance generally covers your Organisation’s physical contents against fire, storm damage, accidental damage or theft. If the premises from which your Organisation operates from is fitted with deadlocks and/or an alarm system, this will reduce the overall cost of taking out this type of insurance.
  
  
• Building Insurance
  The purposes of Building insurance is that it covers your Organisation’s premises (i.e. offices, clubrooms) against events such as fire, storms and vandalism. If your Organisation leases its premises, the Landlord either takes out the Building Insurance and charges you the cost of it as part of your outgoings or asks you to take it out yourself, noting the interest of the Landlord as owner.
  
  
• Professional Indemnity Insurance
  Professional indemnity insurance covers individuals against claims for breach of “professional duty” arising out of any negligent act, error or omission committed or alleged to have been committed during the conduct of professional activities. This insurance is particularly relevant for Organisations involved in providing services such as health care, or those providing advisory services. Private Hospitals are an example of a not-for-profit organisation that would have professional indemnity insurance in place for their staff.
  
  
• Coverage for Injury to Volunteers
  This type of insurance covers volunteers for any out of pocket expenses following accidental injury, disability or death while carrying out their work on behalf of the Organisation. It also covers loss of a volunteer’s income if the volunteer works on a paid basis elsewhere.It is important that Volunteers have the same right to protection as those who are employed by the Organisation and therefore good risk management would mean extending your insurance to cover your Volunteers.

Conclusion

Insurance is only one aspect of effective risk management. Operating a not-for-profit Organisation requires many other considerations to minimise the risks involved. If done properly, effective risk management can contribute to a more strategic and improved day to day operation of your Organisation and can create confidence that your Organisation can deliver the desired outcomes and manage threats to an acceptable degree. The costs of taking out insurance will vary, depending on what type of insurance your Organisation needs and which insurer you go through. A good starting point would be to look at your Organisation’s overall operations (including the persons involved) and then evaluate your Organisation’s insurance needs, as each Organisation’s requirements may vary depending on the type of Organisation you operate. Once taken out, it is then prudent to review your insurance from time to time as circumstances change and insurance needs to be updated to reflect the changes for it to be effective.