Exposures, Concerns, and Solutions

Are nonprofits tough to insure?

Before NIA successfully proved nonprofits to be good risks, commercial insurers believed nonprofits were too risky to insure, and sometimes they still do. But riskiness in of itself isn’t a quality to avoid — in fact, it’s important for nonprofits to take the right risks.

NIA sees the risks nonprofits take for their communities as worthy endeavors. And while strategic risks are different from insurance risks, the extent of operational risks involved in nonprofit services were largely unknown before NIA compiled data and changed the perception of nonprofit risks as unstable and unpredictable.

What’s truly risky, is not knowing how to insure nonprofits. So, here’s what you need to know about nonprofit risks in order to find your clients the right coverages.

a woman helps a child with a learning toy

Insured by NIA:
Long Beach BLAST
Long Beach, CA

Borrowed Property

Risk exposure:

Nonprofits often borrow items from each other, which can then be lost, damaged, or stolen.

NIA’s solution:

NIA’s NONPROFITS OWN® General Liability insurance covers property in the care, custody, or control of the insured.

This allows nonprofits to continue to freely borrow items among themselves, saving funds and building partnerships, as appropriate for their operations.


Risk exposure:

Many nonprofits host fundraising events where they serve and sell alcoholic beverages.

NIA’s solution:

NIA NONPROFITS OWN® General Liability Fundraiser and Event endorsement includes most fundraisers automatically.

NIA also includes full liquor liability — which includes selling as well as serving, where most carriers offer only serving — as a free template endorsement, allowing nonprofits to host fundraising events during which they can serve alcohol without waiting to add an endorsement to their policy.

Working With Young and/or Vulnerable Populations

Risk exposure:

When providing educational, recreational, or other services such as food and shelter for their communities, nonprofits often work with children, teens, the elderly, and disabled populations.

NIA’s solution:

NIA’s Improper Sexual Conduct and Physical Abuse Liability includes separate limits from General Liability and is available in both an occurrence form and claims-made form.

This coverage extends to client-versus-client allegations and includes emotional distress arising out of sexual misconduct or physical abuse.

Risk exposure:

Nonprofits are typically unable to afford to replace an employee who has been accused of sexual misconduct and physical abuse for the duration of an investigation.

NIA’s solution:

NIA’s policy includes a $10,000 reimbursement that the nonprofit can use toward replacing an employee temporarily suspended from work.

To help reduce the risk of abusive behaviors that result in claims, NIA offers risk management services, such as deeply discounted (42% off market rate) background checks.

Risk exposure:

Contracts nonprofits are asked to sign, especially from municipalities, have increasingly adopted draconian wording, often inappropriately pushing all liability onto the nonprofit.

NIA’s solution:

NIA’s NONPROFITS OWN® Improper Sexual Conduct and Physical Abuse Coverage is available with a blanket additional insured endorsement to protect nonprofits.

Social Service Professional Employees

Risk exposure:

Nonprofits often rely on social service professionals — such as social workers, therapists, and nurses who dispense medication — to provide social service programs for the communities.

NIA’s solution:

NIA’s NONPROFITS OWN® Social Service Professional Liability covers a wide array of social service professionals.

Risk exposure:

If a claim is filed against a social service professional, a nonprofit may find it difficult to afford a replacement for that professional for the duration of the investigation, endangering the organization’s ability to continue to serve its community.

NIA’s solution:

NIA’s policy includes a $10,000 reimbursement for the wages of a replacement employee when an employee is suspended from work during an investigation.

Risk exposure:

One type of social service professional on which nonprofits rely is phlebotomists, who draw blood.

NIA’s solution:

NIA’s NONPROFITS OWN® Social Service Professional Liability covers phlebotomists, who are excluded from the Blood Testing Exclusion form modifying CGL and SSP, so that the duties of phlebotomists continue to have coverage.

Your questions answered.

Great job on making it this far. Have some final questions? Here are the top questions NIA hears from brokers. There’s more where this came from, too.

Yes! In fact, NIA writes many organizations that are just starting out.

Just confirm you’ve applied for your organization’s 501(c)(3) status by submitting to NIA a copy of your completed application and proof of payment to the IRS.

Note: You will be required to have your 501(c)(3) status within one year of purchasing coverage.

Yes. Nonprofits Insurance Alliance (NIA) is conservatively reinsured by a group of highly rated reinsurers.

Go to the Claims page to report a claim.

There are many different types of nonprofit organizations, but only federally tax-exempt 501(c)(3) nonprofits qualify for membership with Nonprofits Insurance Alliance (NIA).

NIA insures many types of nonprofits. Find out more about NIA’s appetite.

If you’ve got a brand-new nonprofit, or if you’re thinking about starting one and just doing research for your budget, you may be interested in the minimum annual premiums for all the insurance coverage that NIA offers.

Your insurance quote will most likely differ, as your premium will be entirely defined by your nonprofit’s own level of risk.

Note: These minimum numbers are provided for informational purposes only.