Many of the nation's 1.4 million nonprofits do not purchase any form of insurance coverage. Organizations, even those with limited financial reserves, committed to protecting the agency's scarce assets should carefully consider the coverages described below to develop an adequate risk financing program. Although a CGL policy provides extensive coverage, it does not address every possible liability exposure. A general liability policy will pay the costs to defend against allegations and for damages due to the negligence of the insured. Some insurers are willing to extend the CGL policy to provide coverage for others such as volunteers, sponsors, and landlords.
Policies differ in several critical areas.
In recent years, however, many insurers have designed policies that recognize the needs and resource constraints of nonprofits. Whether the policy includes defense costs within the limit or defense costs are provided in addition to the limit. Nonprofits that lease or own vehicles are aware of the need for physical damage and commercial auto liability coverage. A nonprofit can be held liable, however, for the damage and injuries caused by its employees or volunteers using their own vehicles or vehicles that the agency rents or borrows for its operations. If your agency uses vehicles owned by its staff or volunteers, consider purchasing nonowned and hired auto liability coverage.