You may think that you don’t assume any risks as a nonprofit. However, you assume more risks than a for-profit business does in the same ways. Because there are risks with running any business, you should consider purchasing insurance to protect yourself and your nonprofit organization.
- The 5 best errors and omissions (E&O) insurance for nonprofits
- Why do nonprofit need E&O insurance?
- What does nonprofit E&O insurance cover?
- How much does nonprofit E&O insurance cost?
- How to find cheap nonprofit E&O insurance?
The 5 best errors and omissions (E&O) insurance for nonprofits
After reviewing several insurance providers, we narrowed the choices for nonprofits to the five we felt best covered E&O concerns.
- Simply Business: Best for finding low-cost coverage
- CoverWallet: Best for comparing several quotes
- The Hartford: Best if you prefer a reputable and experienced carrier
- NEXT: Best for combining E&O and general liability insurance in one policy
- Thimble: Best for a fast digital experience
Simply Business: Best for finding low-cost E&O coverage
Simply Business is an online insurance broker owned by Travelers insurance. Simply Business focuses on making it simple and easy to find low-cost small business insurance and buy it online within a few minutes.
Simply Business does the legwork to find you the most affordable policy. They partner with several insurance companies and their quoting platform specializes in finding the most affordable policy for their customers. Below is a quote example we receive from Simply Business for an nonprofit organization based in Los Angeles, California.
Pros:
- Use one form to get quotes from multiple providers
- Easy to find the most affordable policy
- An extensive resource library helps you understand business coverages
Cons:
- A third party underwrites all insurance policies
- No claims can be filed through Simply Business
- Coverage tends to be limited to general and professional liability (or E&O) coverages
CoverWallet: Best for comparing several quotes
CoverWallet is a digital broker specializing in small business insurance. The policies with CoverWallet are easily customized. CoverWallet offers multiple plans for nonprofit organizations. Customization can get you exactly the coverages you need in an affordable manner.
Since CoverWallet partner with several leading insurance companies, they can provide you with several quotes within 10 minutes. That makes it convenient if you want to compare several quotes in one place to choose the cheapest one for you.
Pros
- Fast online quotes. Easy to compare several quotes in one place
- Policies are easily managed online
- Plans are customizable
Cons
- Instant quotes aren’t always available. Sometimes, they have to discuss your quote options on the phone.
- The company has a limited history in business
The Hartford: Best if you prefer a reputable and experienced carrier
The Hartford offers a variety of coverages for nonprofit organizations. The coverages include general liability, property insurance, D&O, employment practices liability, fiduciary coverage, and cyber liability coverage. Nonprofits can also get workers’ compensation, commercial auto, and multinational coverages through the Hartford.
The Hartford has been in business for over a century. The company is rated A+ by AM Best which means they are financially solvent, among other things.
The Hartford offers insurance for nonprofit organizations. However, they do not offer an online quote for their E&O insurance for foundations.
Pros:
- Named one of the “World’s Most Ethical Companies”
- 24/7 customer service is available
- Extended coverage options
Cons:
- Not available in Hawaii or Alaska
- Can’t always get an online quote
NEXT: Best for combining E&O and general liability insurance in one policy
Next sells insurance policies online. The policies can be purchased as individual units or as packages. The company tailors its packages to your specific industry. A benefit to Next insurance is that users can manage their policies online.
Small business owners who need a quick insurance quote and quick coverage can benefit from requesting a quote from this startup. Next handles all its own claims, and it has its own AM Best rating.
Pros:
- Easy online application
- Get a discount with bundled policies
- Share your digital certificate of insurance
Cons:
- Those who prefer paper records may be dissatisfied
- Some specialized insurances are not available
Thimble: Best for a fast digital experience
Thimble is an online insurance provider that lets you opt for coverage by the hour, day, month, or year. Getting a quote from them is very simple. As a matter of fact, their online form is perhaps the least involved of any we’ve seen.
With Thimble, we had to choose a specific industry to have covered. They didn’t offer simply nonprofit E&O insurance. We chose to go with resume writing as that service can be used in many social or civic organizations to help people get back on their feet.
Pros:
- Can get a quote and purchase coverage in minutes
- Coverage based on how long you need it
- Easy to ensure contractors maintain appropriate insurance coverage
Cons:
- Customer support is only available online
- Must file claims by phone or email with the company that underwrites your policy
Why do nonprofits need E&O insurance?
As a nonprofit, you aren’t focused on money. That doesn’t mean you can’t be sued, though. It’s wise to protect your nonprofit and yourself from potential lawsuits. While your goal isn’t to make money, your organization runs like a for-profit business; therefore, you need to consider appropriate business insurance policies for your nonprofit organization.
What is E&O insurance?
Errors and omissions insurance is also sometimes called professional liability or malpractice insurance. E&O insurance protects you from lawsuits that stem from financial costs by clients who feel misled by you or who were harmed by a mistake you made.
Some nonprofits might not need E&O insurance. If your nonprofit gives any kind of advice to other people—legal, medical, or financial advice, for example—you should look into an E&O policy for your organization.
What does nonprofit E&O insurance cover?
Errors and omissions insurance, or E&O, protects you against mistakes or alleged negligence when running your nonprofit organization. E&O insurance can cover attorney’s fees and court costs, and, in some cases, it will even pay a settlement or judgment that has been placed against you.
Coverages of E&O insurance relate to:
- Mistakes
- Allegations of negligence
- Failure to provide services that were promised
How much does nonprofit E&O insurance cost?
The average cost of nonprofit E&O insurance is $54 per month, or $648 a year. Of course, this varies depending on several factors such as:
- The work nature of the nonprofit
- The size of the nonprofit: annual budget, number of employees, etc.
- Location
- The claim history of the nonprofit
- The policy’s terms such as coverage limits, deductibles, etc.
Above is just the average rate. Your rate may be lower or higher. Be sure to shop around with a few companies or work with a top broker like Simply Business or CoverWallet to compare several quotes to find the cheapest one for your nonprofit organization.
How to find cheap nonprofit E&O insurance?
The only way to make sure you are not over-paying for your nonprofit E&O policy is to compare several quotes before making your decision. Different insurance companies will give you different quotes because they assess risks differently.
Make sure all employees in the organization follow the processes and procedures to avoid unnecessary errors that could lead to lawsuits. Achieve zero claims consistently will reduce your nonprofit E&O insurance cost eventually.
Choose the right coverage limits and deductibles for your organization.
Lastly, if possible, pay for the policy upfront and in full. This will help reduce the policy cost by roughly 10%.
Final thoughts
While a nonprofit has different goals than a traditional for-profit business, they still incur risks. Having appropriate insurance coverage can help to mitigate those risks. One insurance that is beneficial to nonprofits is errors and omissions insurance.
Many of the same companies that provide excellent small business insurance coverage also offer coverage for nonprofits. Contact your provider to find out if errors and omissions insurance coverage would benefit you.
