Standard A8 Explained

Why is it important to review insurance coverages? Insurance protects your organization’s people and property from injury, loss, or damage incurred in the course of your organization’s operations. This standard seeks to ensure that nonprofit and charitable organizations possess adequate insurance coverages based on their programs, services, and other activities. Board members need to be familiar with their organization’s insurance policies in order to protect their organization and themselves from risk.

What kind of insurance does my organization need? The amount and kind of insurance an organization needs to purchase depends on the programs and / or services the organization offers as well as the kind of activities it conducts.¹ Boards should consider whether their insurance policies are sufficient given their organization’s mission and operations, and should be familiar with any limitations of their policies.² Limitations can include exclusion of coverage for sexual or physical abuse, limitations related to the geographic area covered by the policy or limitations regarding who is covered by the policy.² Most general liability insurance policies only cover claims made in the context of an organization’s operations. Nonprofit and charitable organizations should also consider obtaining additional directors’ and officers’ liability insurance to protect against claims involving board decisions or actions.² Board members need to understand their organization’s insurance policies as they could be held personally liable if the organization is unable to meet its financial obligations.

1. “Insurance for Voluntary Organizations: Things to Consider,” Insurance Bureau of Canada, 2007.
2. “Primer for Directors of Not-for-Profit Corporations: Rights, Duties, and Practices,” Industry Canada.