Also referred to as business liability insurance, general liability insurance is crucial coverage that protects business owners from third-party claims of property damage and bodily injury. General liability (GL) insurance is essential for nonprofits in all industries.
Lawsuits arise far too often and usually stem from common business activities, such as a slip and fall accident from a wet floor, causing injury to a customer. Without proper coverage, business owners may be responsible for the related expenses.
Nonprofit general liability insurance prevents organizations from having to worry about putting their business and livelihood at risk. Learn more about general liability insurance and why every nonprofit organization should secure a policy.
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What Is General Liability Insurance?
General liability insurance protects organizations if they are held responsible for common accidents that occur at their business, such as a third-party injury or damage to a customer’s property. GL insurance also protects against accusations of libel and slander.
All businesses, including nonprofits, face certain risks that could negatively impact their reputation and finances making general liability insurance one of the first policies purchased by nonprofit organizations.
Liability coverage is often included in most standard business insurance packages as it covers the risks that business owners face on a day-to-day basis.
Although purchasing a policy is not required by law, many agencies and clients will refuse to work with a business unless they provide a valid certificate of insurance. In addition, nonprofits seeking to rent a commercial property may be required to have coverage as part of their commercial leasing terms.
Why Is General Liability Insurance Important?
Acquiring general liability insurance for a nonprofit organization is important for numerous reasons. This type of coverage can help pay for expenses after the occurrence of an accident, such as an injury or property damage. Insurance ensures that organizations do not unnecessarily financially suffer when an unexpected incident occurs that results in a lawsuit.
General liability insurance can also give nonprofit organizations a competitive advantage. If potential clients or customers have the choice between a business that has insurance and one that does not, many clients will choose a business with insurance. In fact, larger clients may require coverage before signing a contract with an organization.
In certain situations, a general liability insurance policy may be required for legal reasons.
Some cities and states will only provide an organization with a business permit if they have an active GL insurance policy and a certificate of insurance. Businesses that are accredited by a professional organization may also be required to maintain an active general liability insurance policy.
What Coverage Is Available for Nonprofits?
Nonprofit organizations can benefit from the comprehensive coverage that most general liability insurance policies offer. Organizations can expect to find the following coverage types on their policy:
Third-Party Bodily Injury
If someone sustains an injury and the nonprofit is found to be responsible, the business may be required to pay the costs of the victim’s medical expenses. General liability insurance helps cover medical bills, settlements, court-ordered judgments and attorney fees.
Third-Party Property Damage
When providing a product or service to customers, there is a possibility that an item may be lost or damaged. If this type of situation impacts a client or customer, the organization may be held liable. GL insurance will help pay for the legal costs from a property damage lawsuit, repair of the damaged item and the replacement of a lost or irreparable item.
When a nonprofit advertises its products or services, a separate business may choose to replicate the organization’s slogan or logo. General liability insurance typically covers accidental advertising injuries, such as defamation, copyright infringement or brand infringement.
Does General Liability Insurance Cover Volunteers?
Nonprofit organizations often rely heavily on volunteers to help further their cause.
As with employees, volunteers are susceptible to experiencing or causing bodily injury or property damage; however not all general liability insurance policies cover volunteers leaving nonprofits at risk for costly lawsuits. When purchasing a GL policy, it is important to confirm that the policy’s coverage includes both employees and volunteers.
There are volunteer immunity laws that are designed to protect volunteers against such lawsuits; however, they are not without limitations. Providing proper coverage for their volunteers mutually provides protection for the nonprofit organization.
Provisions often indicate that a volunteer’s immunity only applies if the claim exceeds the limits of the insurance policy carried by the nonprofit organization. With the proper coverage, a nonprofit organization is protected if a volunteer is responsible for an accidental injury or property damage.
What Other Types of Insurance Do Nonprofits Need?
General liability insurance is one of the most important policies that any nonprofit organization can acquire. However, it does not protect against all risks. Nonprofits can also benefit significantly from other types of insurance policies, such as:
Business Owner’s Policy
A BOP bundles commercial property insurance with general liability insurance. Not only does a BOP save businesses money, but it also safeguards against forced closure, advertising injuries, damage to business property and visitor property damage and injuries.
Directors and Officers Insurance – A D&O insurance policy protects board members and officers from legal expenses in the event that they are sued for an action they made on behalf of the nonprofit that led to a financial loss.
Professional Liability Insurance
Also referred to as errors and omissions insurance, this type of policy protects nonprofits against the costs of client lawsuits over work deemed unsatisfactory.
Employment Practices Liability Insurance
EPLI policies can help cover legal costs if a nonprofit is sued by an employee over a violation of employee rights, such as wrongful termination. This type of policy covers unfair hiring practices, alleged hostile work environments, wrongful demotion, discipline or termination and employee harassment or discrimination.
Speak with a Business Benefits Consultant
Acquiring nonprofit general liability insurance is one of the best ways for organizations to protect their business from risks such as third-party bodily injury and property damage.
To learn more about nonprofit general liability insurance or to speak with an experienced business benefits consultant about choosing a policy for a nonprofit, contact the insurance experts at Business Benefits Group.