Business Insurance for a Nonprofit Organization

Business Insurance for a Nonprofit Organization

There are few laws requiring you to have insurance, but if you do not have insurance you may face liability that may jeopardize your business. You should be aware of the types of insurance available and weigh the risks of a loss against the cost of a policy.

Be aware that there can be a wide range of prices and coverage in insurance policies. It is good to compare quotes from different insurance agents and ask each one to explain the benefits of his or her policy.

Workers' Compensation

In most states, if you have four or more employees, you are required by law to carry workers' compensation insurance. It protects you if an employee is injured while on the job.

To protect yourself from litigation, you may wish to carry workers' compensation insurance even if you are not required to have it. This insurance can be obtained from most insurance companies, and at least for low-risk occupations, it is not expensive. Failure to provide workers' compensation insurance when required is considered serious. If a person is injured on a job, even if another employee caused it or the injured person contributed to his or her own injury, you may be required to pay for all resulting losses.

Hazard Insurance

One of the worst things that can happen to your organization is a fire, flood, or other disaster. Losses after such an event have caused many organizations to close. The premium for such insurance is usually reasonable and could protect the organization from certain losses..

Automobile Insurance

If you or any of your employees will be using an automobile for business purposes, be sure that such use is covered. Sometimes, a policy may contain an exclusion for business use. Check to be sure your liability policy covers you if one of your employees causes an accident while running a business errand.

Health Insurance

While new organizations can rarely afford health insurance for their employees, the sooner they can obtain it, the better chance they will have to find and keep good employees. As the person running the organization, you will certainly need health insurance for yourself (unless you have a working spouse who can cover the family), and you can sometimes better rates if you purchase a small business package.

Employee Theft

If you fear employees may be able to steal from the organization, you may want to have them bonded. This means that you pay an insurance company a premium to guarantee employees' honesty, and if they cheat you, the insurance company pays you damages. This can cover all existing and new employees.

  • Definition of a Nonprofit Corporation
    A Nonprofit corporation is a special type of corporation that has been organized to meet specific tax-exempt purposes. To qualify for Nonprofit status, your corporation must be formed to benefit: (1) the public, (2) a specific group of individuals, or (3) the membership of the Nonprofit. Examples...
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  • Reasons to Form a Nonprofit Corporation
    As someone involved with a charitable cause, you might be weighing the benefits of formally organizing your nonprofit. While it might take a little extra work, only with a state-recognized nonprofit corporation can you obtain private and public grants, low-cost postage rates and be exempt from...
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  • Comparing a Nonprofit to an LLC or Corporation
    Nonprofit corporations enjoy the same liability protection as regular corporations and limited liability companies. In other words, your directors, trustees, members, and employees are not generally responsible for corporate debts and liabilities. There are also significant federal and state tax...
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  • Tax Exemption for Nonprofits
    Forming a nonprofit corporation with your state does not automatically qualify you for federal tax exemption with the IRS. Once you have created your nonprofit by filing the necessary documents with your state, if you want federal tax exemption, you must file a separate application with the IRS....
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  • Commercial Rights of Nonprofits
    The fact that a corporation is a nonprofit does NOT mean the corporation cannot sell goods or services for money. In fact, many nonprofits make money selling everything from clothing to medical services. A nonprofit can pay salaries to officers and employees. But, in order to maintain nonprofit...
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  • Managing a Nonprofit Corporation
    Directors are responsible for the management and operation of a nonprofit corporation. Nonprofit directors can serve with or without compensation. If you decide to compensate directors, remember that compensation must be deemed "reasonable" by the IRS. Directors are under the same constraints of...
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