But before applying for one, organizations should carefully review the fine print about insurance. Many government agencies,foundations and other grant providers require recipients to carry specific types and amounts of insurance coverage as a condition of receiving funding.
Failing to meet those requirements could delay an award, jeopardize funding or leave an organization scrambling to purchase additional coverage for a price they may not have budgeted for.
Common insurance requirements
Insurance requirements vary depending on the funding source, an organization’s activities and the populations it serves. Some of the most commonly requested coverages in grants include:
· General liability insurance: This covers certain claims involving bodily injury, property damage and personal injury. Some grant agreements require liability limits of $1 million or more.
· ** Directors and officers liability**: This may protect board members and executives against claims involving management decisions, governance and alleged wrongdoing.
· ** Workers’ compensation**: This insurance is often required for organizations with employees under state law and may also be specified in grant agreements.
· Professional liability: These policies may cover claims arising from errors,negligence or mistakes in providing professional services, including counseling and other social services.
· ** Abuse and molestation coverage**: This may be required for organizations serving children, seniors and other vulnerable populations.
· ** Commercial auto liability**: Grantors may require this when employees or volunteers use vehicles for organizational activities.
Grants involving buildings, equipment or other physical assets may also require property insurance.
Don’t overlook the details
Simply having an insurance policy may not be enough to satisfy a grant agreement.
Funders may specify minimum coverage limits, require certain endorsements or ask to be named as an additional insured on applicable liability policies.
Organizations may also need to provide certificates of insurance demonstrating that required coverage is in place.
Some agreements require insurance to remain in force throughout the grant period. Allowing coverage to lapse could put continued funding at risk.
What nonprofits should do
Before submitting grant applications, organizations should:
· Review all insurance provisions in the application and proposed agreement.
· Compare those requirements with existing policies and coverage limits.
· Contact us about any gaps or additional coverage needs.
· Include anticipated insurance premiums in grant budgets when permitted.
· Allow sufficient time for obtaining coverage and required documentation.
The takeaway
Reviewing requirements early and working with us can help your organization avoid unexpected expenses, meet grant conditions and protect the funding that supports its mission.
