Lally This is the second of a six-part series on common myths associated with the risks of using volunteers in nonprofit organizations. We'll look at each myth for its impact on liability assessment, the purchase of insurance, and risk management planning. Purchasing insurance has often been the sum total of the risk management effort of many nonprofits, but this approach is too limited. Consider risk management to be an entire system of ways of dealing with risks, of which insurance makes up only one component.
Insurance is inadequate when it is the sole method of risk management.
Many risks are excluded from coverage under liability insurance policies, for example, while others may by subject to restrictive policy terms. Still others may not be cost-effective to insure. Also, insurance only helps once a loss has happened. It's not designed to prevent losses to volunteer organizations, which for our purposes is a major risk management goal. So volunteer organizations can rely on insurance for limited purposes only, and need to create a larger risk management program to effectively protect themselves.