What it is
This is the foundation of all nonprofit insurance programs. Nonprofit general liability insurance provides a wide variety of coverage for claims and lawsuits associated with bodily injury to a third party, damage to someone’s property, personal injury, or advertising injury. The insured must be negligent (or legally responsible) in order for a claim to be valid.
3 reasons your Nonprofit needs this coverage
- Your legal costs are covered by your General Liability policy: You can be sued at any time for virtually any reason and regardless of whether or not there was any wrong doing you will still have to pay the legal fees to defend yourself.
- You have grants or rent venues for events: Most grantors and most venues will require that you have General Liability insurance at a certain level.
- People make mistakes: Any one of your employees or volunteers could make a simple mistake that could cause injury to another person or another person’s property which could result in damages and have an adverse effect on your budget.
This could happen to your nonprofit
Slip and Fall:
A nonprofit has meetings, events and tours at their various sites. On one occasion, they forgot to put out warning cones on a wet floor after a rainstorm. A visitor suffered a torn ligament in her right knee and a right wrist sprain. The nonprofit had the right protocols in place, which included the use of warning cones, but forgot to use them. The claim was settled at mediation for $50,000. Legal expenses were more than $17,000.
A nonprofit runs a transitional housing program for clients recovering from alcohol or substance abuse. The clients are required to pay subsidized rent and actively participate in the recovery programs. One client was not doing either, so with the approval of its legal counsel, the nonprofit had the client removed. The client, acting as his own attorney, filed suit in both Federal and State courts, claiming $10 million in emotional distress. The case went to a jury and based on the nonprofit’s clear records and a subsequent compliance finding by the funding agency, the jury found in favor of the nonprofit. However, legal costs were more than $95,000.
A nonprofit had an annual event that included a zip line for children, which ran from hay bales stacked eight feet high down to the ground. It was supervised by a volunteer who, against his better judgment, allowed an 8 year old boy, who was very anxious and fearful, to ride. He fell off as soon as he left the hay bales and suffered a leg fracture that had to be surgically repaired. Concluding that the nonprofit was legally responsible, a structured settlement was negotiated with the family’s attorney that provided for future medical care, pain and suffering, and attorney fees. The loss cost was $60,000 and the expense was minimal.