It may come as a surprise that charitable organizations need some form of insurance coverage. After all, these are non-profit organizations that are geared towards the greater good and therefore should be exempt from the same rules as other companies, right? Unfortunately, this is not the case. charity insurance is an absolute necessity for every organization. This is more for the protection of the charitable organization than anything else, and will cover a wide variety of losses that could hamper the charity's ability to meet its objectives.
What Constitutes a "Charitable Organization"?
Before applying for insurance, it is important to determine whether or not the organization in question falls into the appropriate category. There is a general misapprehension which leads people to believe that every non-profit business is a charity. While every charity is a non-profit organization, the reverse is not necessarily true.
A charitable organization is founded on philanthropic principles and is aims to improve the well-being of the public in some way. Generally speaking, a charity is almost always centered around education, religion, social responsibility or fundraising of some form. These organizations are exempt from taxes.
Charities receive funds in one of two ways. Many charities are funded through private benefactors while others operate almost solely on government grants. Irrespective of the type of funding, though, charitable organizations do need to operate as businesses on some level and therefore require insurance coverage.
What Types of Insurance are There?
General liability insurance is of the utmost importance for charitable organizations. This will provide coverage in the event of injuries suffered by third parties on the organizations premises or at an event location. It also covers accidental damages caused to anyone else's property. This type of insurance covers legal fees and court costs.
No charitable organization should be without property insurance. Most charities are equipped with valuable office equipment and supplies, including telecommunications devices and IT systems. In the event of a burglary or catastrophic event, these organizations need to be able to replace what has been lost. Since most of the equipment on the premises will have been acquired through donors, it is almost impossible to replace them without any sort of stable income. Insurance coverage takes care of that problem.
Directors and officers insurance is another absolute must. Most charities operate under a board of directors. In an ideal world, these people would not suffer the same harassment as is found in regular corporate environments. However, there are those who would sue for the slightest offense. In the event that a board member is falsely accused of wrongdoing, he or she will need to be covered against any legal fees that are incurred.
Are there Other Important Types of Insurance?
Charities may also wish to consider procuring workman's compensation, vehicle insurance, fidelity insurance, and loss of income insurance. Each of these insurance types has its own range of benefits designed to cover non-profit organizations in the face of unexpected challenges. All in all, it seems clear that insurance, in all its forms, is worth looking into.