Your guide to Not-For-Profit public liability insurance
Key takeaways
- Public liability insurance is not legally mandatory for Australian non-profits, but local councils, venues and grant providers almost always require it before you can operate.
- Most policies cover the organisation if a volunteer's negligent action injures a third party, but they do not cover the volunteers or members themselves for their own injuries.
- Cover is available even for unincorporated community groups without an ABN, and many specialised NFP policies include extensions for defamation arising from newsletters or social media.
Do not-for-profit (NFP) businesses need public liability insurance?
While it's not required by law, having public liability insurance is not something you want to easily dismiss. Public liability insurance protects your NFP organisation if someone claims your negligence has led to property damage or an injury. This can help cover the compensation or legal fees of paying out a third party, as well as any costs in the defence of these claims.
Negligence or unexpected mishaps won't always be in your control, even with strict safeguards in place. So it can be very helpful to have another safety net. This is particularly important if your organisation regularly engages with the public with events and serves food or drinks.
Public liability insurance isn't a perfect fit for every NFP. If your organisation has minimal contact with third parties or the public, it might make sense to go without it. For example, if your organisation operates entirely online, the risk of a claim might be too low to justify the cost of public liability premiums.
Should Not-For-Profit businesses have business insurance?
Depending on how your NFP operates, it's a good idea to consider various types of business insurance. Here are a few options:
Public liability insurance:
Covers your organisation against claims related to injuries or damages to third parties during the course of your work, or while using your products or services.
Pros
- Shields NFP from hefty legal costs and compensation claims
- Improves your credibility with donors and volunteers
- Allows the team to focus on your organisation's mission, instead of potential claims.
Cons
- Premiums can be a financial burden, especially for smaller NFPs
- Terms can be complex and may need professional advice
- Limited coverage, compared to comprehensive liability insurance
Professional indemnity:
Protects against claims of negligence related to the advice or services your organisation offers. This is crucial if your NFP provides healthcare or financial advice.
Pros
- Protects against legal costs and compensation claims
- Helps maintain NFPs reputation
- Team can perform their roles with confidence
Cons
- Premiums can be expensive, especially for high risk services
- Specific claims might be excluded
- May require extensive documentation and record-keeping to validate claims
Workers compensation insurance:
In most cases this will be compulsory if your NFP has paid employees. It covers expenses like wages and medical bills if an employee is injured at work.
Pros
- Compliance with workplace safety laws
- Covers costly medical expenses and lost wages for injured employees
- Reduces liability risk
Cons
- Premiums can vary based on the number of employees and nature of work
- Each state will have different requirements
- Employees may try to claim non-work-related injuries
Property insurance:
Covers damage to your organisation's property, including equipment and facilities. If your organisation hosts many events or has high value inventory on site, this type of cover can be valuable.
Pros
- Protects the NFPs assets from theft and damage
- Offers peace of mind from unforeseen events
- Can be valuable for fundraising and promotional events
Cons
- Premiums can get depend on property value
- Payouts can decrease with property depreciation
- Filing claims may need detailed documentation
Where can a Not-For-Profit business get business insurance?
You can purchase business insurance directly from insurance providers or brokers who specialise in finding insurance for non-for-profit organisations. Buying through a broker can give you access to tailored packages as well as professional advice. This can be really helpful if your NFP has complex operations and needs a policy that is tailored.
Some examples of providers that offer business insurance specifically for NFP organisations include GIO, NRMA, and Unicorn Risk Services.
What happens if a Not-For-Profit business doesn't have public liability insurance?
While the government won't come after you, not having public liability insurance exposes your organisation to significant risk. If a claim is made against you – like a slip and fall incident during an event – your organisation could be liable for hefty legal fees and compensation costs.
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