Running a nonprofit comes with unique challenges. While the primary focus is on serving the community, financial risks can threaten an organization’s stability. Liability claims can arise from various situations, including volunteer injuries, property damage, or legal disputes. Standard insurance policies provide protection, but they often have limits.
This is where umbrella insurance plays a crucial role.
How Umbrella Insurance Helps Nonprofits
- Extends Coverage Beyond Standard Policies – General liability and directors and officers insurance offer essential protection, but these policies have limits. If a claim surpasses those limits, umbrella insurance helps cover the additional costs.
- Protects Against Costly Lawsuits – Legal disputes involving volunteers, employees, or third parties can result in expensive claims. If a lawsuit leads to settlements or judgments exceeding policy limits, umbrella insurance can intervene.
- Reduces Risk from Events and Daily Operations—Nonprofits often host fundraisers, community events, and volunteer programs, which increase the likelihood of liability claims. Umbrella insurance ensures the organization is protected against unexpected legal and financial challenges.
Common Risks Nonprofits Face
Even with the best risk management strategies, unexpected incidents can occur. Some of the most common risks include:
- Volunteer or Employee Injuries – If a volunteer or employee is injured while working for the nonprofit, the organization may be responsible for medical expenses and legal fees. Workers’ compensation covers employees, but volunteers may not be included in the coverage.
- Defamation or Libel Claims – Nonprofits engage in advocacy, fundraising, and community outreach, often using public communication channels. Legal costs can be significant if a social media post, newsletter, or public statement leads to a defamation claim.
- Property Damage – Renting space for an event or operating out of a shared facility increases the risk of accidental damage. If the cost of repairs exceeds liability limits, umbrella insurance provides additional coverage.
- Auto Liability – Employees or volunteers using personal or rented vehicles for nonprofit activities could be involved in an accident. If damages exceed the coverage provided by auto insurance, umbrella insurance helps cover the remaining costs.
Also Read: How Much Umbrella Insurance Coverage Do I Need?
Choosing the Right Coverage
Selecting the right umbrella insurance policy requires careful evaluation. Key steps include:
- Reviewing Existing Policies – Understanding the coverage limits of general liability, and auto policies helps determine how much umbrella insurance is needed.
- Assessing Risk Exposure – Nonprofits that work with vulnerable populations, provide medical services, or operate internationally may need higher coverage limits.
- Comparing Cost vs. Protection – While umbrella insurance costs vary based on risk factors, the potential financial impact of an uncovered lawsuit far outweighs the premium.
Secure Your Nonprofit Organization with Premier Risk Insurance
Unexpected claims can create financial challenges that disrupt a nonprofit’s ability to serve the community. Umbrella insurance provides an extra layer of protection, ensuring that legal and financial risks do not jeopardize the mission.
At Premier Risk Insurance, we help nonprofits find the right coverage to protect their operations. Contact us today or call our team at (516) 599-8484 to learn how umbrella insurance can safeguard your organization.
