What it is
Umbrella insurance provides increased coverage limits over other types of nonprofit liability insurance. It is primarily meant to increase the limit of your general liability coverage but can also go over your auto liability, directors and officers liability, professional liability, improper sexual conduct liability, and/or workers’ compensation.
Three Reasons Why Your Nonprofit Needs this Coverage
- Required by Funders or Municipalities: Many times third parties will require limits of liability that are more than your basic limits.
- High New Worth Board Members: If you have wealth board members they may require that you have high liability limits so that they can be adequately protected for their service to your organization.
- Significant Organizational Assets: If your organization has assets more than $1,000,000 (the basic general liability limit) then you need to consider umbrella coverage to protect 100% of your assets.
This Could Happen to Your Nonprofit
A volunteer at a boys and girls club fell off of a ladder while helping to paint the club’s gymnasium. She broke both her legs, was permanently disabled and could not return to her job. The medical bills and settlement reached $1,850,000.
Another Bad Injury:
An environmental organization took a group of school children on a tour of one of their properties. The children began throwing pine cones at each other and one child was injured and lost his eye. The parents sued for medical bill payments as well as the cost of the permanent lifetime disability. Actual responsibility for the injury was disputed. Eventually the claim totaled $2,500,000 and the defense costs were over $75,000.
An employee of a sheltered workshop sued for sexual harassment claiming that the executive director would not promote her unless she had a sexual relationship with him. She also claimed that the board had mismanaged the organization because they knew about the behavior of the executive director but would not fire him. The lawsuit went before a jury who awarded the claimant $1,500,000.