Whether or not your organization owns vehicles you can have an auto claim or lawsuit brought against you. This fact is one of the most misunderstood risk factors that nonprofits face. However, it is easily mitigated by including Non-owned Auto Liability in your insurance program. This coverage can cost as little as $250 per year and provide significant protection.
So, what is a "non-owned auto"? It's any vehicle not owned by your organization but used to conduct the business of the organization. In other words, it's the vehicles owned and used by your employees and volunteers while pursuing your mission and implementing your operations and activities. This includes your financial officer driving to the bank to make a deposit or your ED driving to meet a large donor or a volunteer delivering meals or driving to a school site or picking up a client... The list of possible times when an employee or volunteer is driving on behalf of the organization is endless.
And, what's your liability. Well, the insurance follows the vehicle. That means that the owner (employee or volunteer) has personal auto insurance and if there is an at-fault accident the insurance on the vehicle will respond first to any claims or lawsuits.
For example, if your ED is running late to meet with that donor and runs a red light and hits a pedestrian and another vehicle. The ED's personal auto insurance is the first line of defense in paying the associated claims.
But, what if there are damages beyond the limits of insurance the ED has on his or her own personal auto policy? What if the pedestrian needs back surgery? What if the ED hit a Maserati? These could all be very expensive claims that could blow through the limits of coverage.
But, what if your nonprofit get's sued directly as a result of the accident which is always the case in really bad accidents. Your organization has no coverage on the ED's personal auto policy and would have to pay its own defense costs at the least and damages at the worst.
These are the circumstances that Non-owned Auto Liability is for.:
1) Damages in excess of the personal auto policy on the at-fault vehicle
2) Claims directly against the nonprofit entity
How do you get the coverage?
1) Complete a short application
2) Have a procedure in place to verify the personal auto coverage for anyone who regularly drives on behalf of your organization
3) Verify that your regular drivers have an acceptable driving record
This is essential coverage for all nonprofits not only to protect the organization but as a way to take care of the public.