Guide to Insurance Coverages for Nonprofit Volunteers in California

Guide to Insurance Coverages for Nonprofit Volunteers in California

Nonprofit volunteers are the lifeblood of nonprofits. They dedicate their time and energy to support various causes, making it essential to protect them and the organizations they serve. Many nonprofit entities have far more volunteers than employees.

This article explores insurance coverage options for nonprofit volunteers, weighing the pros and cons, and explains why California nonprofits should consider these coverages.

Key Insurance Coverages for Nonprofit Volunteers

Understanding the different types of insurance available for nonprofit volunteers is crucial.?

These coverages protect your volunteers and safeguard your nonprofit from potential liabilities, ensuring smooth and secure operations.

Here are the most common types of insurance available.

1. General Liability and Medical Payments Insurance

Pros:

  • Can offer comprehensive protection against a broad spectrum of claims.
  • Boosts your organization’s credibility and instills confidence in your volunteers.

Cons:

  • Can be costly, particularly for smaller nonprofits.
  • May have coverage gaps depending on the policy and clarification that the board members are included in the definition of an “insured” on the policy.

General liability insurance protects against bodily injury, property damage, and potentially other liability claims. This coverage can apply to incidents occurring on nonprofit premises or when a nonprofit holds a special event. This insurance offers nonprofits a safety net that can handle various claims. This may include a volunteer leaving a box on the floor that they trip over causing injury, to a volunteer accidentally damaging a donor's property during a fundraising activity.

Context for California: California’s high litigation rates make robust coverage crucial. For example, general liability insurance can cover medical expenses and legal fees if issues as noted above arise. Because most volunteers are not commonly covered by workers compensation insurance, the nonprofit can be left vulnerable.?

2. Volunteer Accident Insurance

Pros:

  • Can provide financial support for injured volunteers, promoting a sense of security for a VERY nominal premium.
  • Encourages more people to volunteer, knowing they are protected.

Cons:

  • Usually written on an excess or secondary basis (pays AFTER the volunteer’s medical insurance pays).
  • May not cover long-term disability or lost wages, leaving some financial gaps.
  • Could be seen as an extra, non-essential expense by some organizations.

Volunteer accident insurance is designed to cover out of pocket expenses (deductibles, co-pays, etc.)? for injured volunteers while performing their duties. This type of insurance often includes benefits for accidental death and dismemberment, providing a comprehensive safety net for volunteers. By offering this coverage, nonprofits show their commitment to volunteer safety, which can motivate people to consider volunteer work.

Context for California: Given California's high cost of medical care, this insurance is invaluable. For instance, if a volunteer is injured while setting up an event, the out of pocket expenses for treatment at the emergency room can be reimbursed to them.? Even though California requires that all residents carry their own health insurance, the nonprofit really has no way of knowing if that coverage is in place or if the volunteer has a very high deductible.

3. Directors and Officers (D&O) Insurance

Pros:

  • Essential for attracting and retaining qualified board members who may otherwise be deterred by personal risk.
  • Can shield the personal assets of nonprofit leaders, providing peace of mind.

Cons

  • Premiums can be high, especially for larger organizations.
  • There are coverage exclusions and limitations that need careful review and clarification that the board members are included in the definition of an “insured” on the policy.

Directors and officers (D&O) insurance can protect and defend board members and officers from liability arising from their decisions on behalf of your nonprofit. This coverage may include legal defense costs and damages from lawsuits alleging wrongful acts, which can be crucial in maintaining the confidence of those in leadership positions. Qualified individuals may hesitate to serve on a nonprofit’s board without this protection.

Context for California: California has stringent regulatory and legal scrutiny, making D&O insurance critical. For example, if board members face a lawsuit for alleged mismanagement, this insurance may provide defense coverage through the insurance carrier meaning little or no out of pocket attorney costs to defend the suit.

4. Non owned automobile coverage?

Pros

  • Protects volunteers from having to file a claim or, having to use their personal auto insurance when the responsibility belongs to the nonprofit.?
  • Higher liability limits may be available than the volunteer would carry under their own personal auto policy.?
  • Can usually can be obtained for a very nominal premium.

Cons

  • The nonprofit needs to set up a procedure to verify that all volunteers have their own personal auto policy, even though it may not be used in this scenario.??

Non owned and hired automobile coverage can pay for bodily injury or property damage that is caused by a volunteer or employee while operating their own vehicle on behalf of a nonprofit.?

Context for California: Should the volunteer, while driving their own vehicle on behalf of the nonprofit be involved in an accident, their personal automobile insurance policy should be notified. Their personal automobile insurance company can elect to recover the funds they pay out from the nonprofit because the volunteer was using their vehicle on behalf of the nonprofit at the time of the accident. Non owned automobile coverage would then apply, and the non owned automobile insurance carried by the nonprofit could pay the personal automobile insurance company the funds requested.?

Insurance coverage is vital for nonprofits to protect their volunteers and themselves. California nonprofits, in particular, face unique challenges that make these coverages essential.

As a result, proactive risk management and volunteer protection are critical. Contact H.N. Christensen for a personalized consultation on your nonprofit insurance requirements.

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