Nonprofit Insurance

What insurance does a nonprofit need?

Being a charity or tax-exempt organization does not protect you from lawsuits. People can still get hurt at your events, board decisions can still be challenged, and property can still be damaged. Most nonprofits need two core policies.

General liability insurance covers bodily injury and property damage to others. Think of a guest tripping at a fundraising gala, a child injured at a youth program, or a volunteer accidentally damaging a venue's wall. It also covers some advertising claims, such as accidental copyright issues in your marketing.

Directors and officers (D&O) insurance protects the people who run the organization. Board members and officers can be sued over decisions, such as how funds were used, a dispute with a donor, or how an employee was treated. Many D&O policies for nonprofits include employment practices liability (EPL), which covers claims like wrongful termination or discrimination. Good D&O coverage also helps you recruit board members, who often ask about it.

Depending on your work, you may also need:

• Property coverage or a business owner's policy for your office, equipment and supplies.
• Abuse and molestation coverage if you work with children, seniors or vulnerable adults. This is often excluded from general liability and must be added.
• Workers' compensation for employees, and volunteer accident insurance for volunteers.
• Commercial auto or hired and non-owned auto (HNOA) coverage if staff or volunteers drive for you.
• Cyber insurance if you store donor payment data or personal information.

How much does nonprofit insurance cost?

Insureon does not publish a nonprofit-specific median. Its 2026 data for all small businesses (100,000 customers) shows:

What affects your nonprofit's price:

• Your activities. Youth sports, shelters and transportation programs cost more to insure than an office-only advocacy group.
• Number of employees, volunteers and events.
• Annual budget and revenue.
• Whether you own a building or vehicles.
• Limits, deductibles and claims history.

See how much business insurance costs or estimate your package with the cost calculator.

Example claims (illustrative)

Example: A guest slips on a wet floor at your annual fundraiser and breaks a hip. General liability can help pay medical costs and legal fees.

Example: A major donor says the board used a restricted gift for the wrong purpose and sues the board members. D&O insurance can pay for their defense.

Example: A former employee claims they were fired unfairly. If your D&O policy includes employment practices coverage, it can respond.

Example: A volunteer driving their own car to deliver meals causes an accident. Their personal auto insurance usually responds first, and hired and non-owned auto coverage can protect the nonprofit if it's also sued.

Is insurance required for a nonprofit?

Federal tax-exempt status doesn't come with an insurance requirement. Still, insurance is often required in practice:

• Grant makers and government funders may require general liability and sometimes D&O.
• Event venues and landlords usually require general liability and want to be named as additional insured.
• Partner organizations, schools and parks may ask for certificates of insurance.

If you have employees, workers' compensation is required in most states; the employee threshold varies by state. See workers' comp requirements by state.

Volunteers: what's covered?

Volunteers are not employees, so workers' compensation may not cover them. Ask your insurer about volunteer accident insurance, which pays medical bills for volunteers hurt while helping you. Also confirm that your general liability policy lists volunteers as insureds, so they're protected if someone sues them over their volunteer work.

Special events and fundraisers

Galas, runs, festivals and auctions bring large crowds and unusual risks. Before each event, check:

• Venue requirements. Most venues require general liability with specific limits and want to be named as additional insured.
• Alcohol. If alcohol is served or sold, you may need liquor liability coverage. Using a licensed caterer or bartender who carries their own insurance helps.
• Vendors and performers. Ask every vendor, from caterers to DJs, for a certificate of insurance.
• Special event policies. If your regular policy doesn't cover a large or unusual event, a one-day special event policy can fill the gap.

Board governance and D&O

D&O insurance responds best when the board follows good governance. Keep minutes, document major decisions, avoid conflicts of interest, and follow donor restrictions on gifts. Many D&O claims involve employment issues, so clear HR policies and consistent treatment of staff also lower your risk.

Grants that require insurance

Government and foundation grants often include an insurance section in the agreement. Read it before signing. It may require specific limits, additional insured wording, or coverage types such as abuse and molestation or auto liability. Missing a requirement can delay payments or put the grant at risk.

How to lower your premium

• Write safety rules for events, programs and volunteer roles.
• Screen and train volunteers, especially those who work with children.
• Use waivers and sign-in sheets for higher-risk activities (they help, but don't remove all liability).
• Get certificates of insurance from vendors and contractors at your events.
• Bundle property and liability in a BOP if eligible.
• Shop around: some insurers specialize in nonprofits and may offer program discounts.