Risk management is important for every organization to integrate into their operating strategy. Insurance is the cornerstone of any risk management plan, including your non-profit organization’s financial plan. While insurance cannot protect your organization from every adverse situation, it is critical to protecting the people, property, funds, and support you depend on.
Baseline Insurance Policies
Among the wide variety available, there will likely only be specific types of insurance coverage that your organization will need. One type that every organization can benefit from is a general liability policy. This will protect your organization in the event of accidents and injuries suffered on your property by clients, volunteers, suppliers, visitors, and anyone other than employees. Your state also likely mandates unemployment insurance as well as workers’ compensation coverage. Property insurance that covers theft and damage to your buildings, furniture, fixtures, supplies, and other physical assets is essential, too. When buying a property insurance policy, make sure it covers the replacement cost of assets, rather than their current market value (which is likely to be much lower).
Optional insurance coverage
Insurance policies are available to cover a wide range of situations. For example, policies are available to cover risks associated with special events, which may also be included in your nonprofit’s general liability insurance. Beyond special event coverage, your organization may want to consider other policy options such as:
- Automobile
- Product liability
- Fraud/employee dishonesty
- Business interruption
- Umbrella coverage
- Directors and officers liability
Prioritizing coverage
If your organization is like most non-profits, you are likely working within a limited budget. That means that your organization will need to prioritize its risk management strategies. You can talk with your financial and insurance advisors about which kinds and levels of coverage will adequately mitigate your organizations risks. Insurance itself is only one piece of a risk management plan. You should also mitigate major risks through internal controls and other risk-avoidance policies.
Ernst Wintter & Associates LLP specializes in California non-profit audits and tax preparation. Contact us today for help with your non-profit audit or tax prep needs.