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Most of us do not know about World NGO Day on the 27th of February. It is a day to spread awareness of the importance of NGOs and their crucial role in the world. It is a day to understand the different types of NGOs and nonprofit organisations that help various people, animals and the environment.

NGOs and Nonprofits in Hong Kong operate to benefit and fight for a great cause. However, they are not the same and are classified differently in Hong Kong and the world. 

Even if they may differ, they share similar business risks that can ruin and disturb their purpose. There are 1000s of NGOs and nonprofits in Hong Kong that should be aware of their business risks and protect their future.

Hence, insurance for NGOs and nonprofits in Hong Kong is crucial to help them spread their positive service and effectively deal with NGO risks and nonprofit risks.

What are NGOs and Nonprofits?

NGOs non-governmental organisations, work independently (locally or internationally) to spread awareness of public and social welfare goals. (e.g. international human rights, poverty, animal cruelty). The organisation operates on investors or even sponsors company funds. 

nonprofit organisation is a business that reinvests all its profits into the business to manage expenses, meet its social goals, and pay staff. They typically operate (locally) to improve and spread awareness of local issues (e.g. charities, environmental clean-ups, churches, public clinics). Nonprofits are commonly run on donations, loans, investments or grants.

Both organisations help the public and promote positive social change; however, the main difference is that non-governmental organisations can operate internationally.

Main Insurance for NGOs & Nonprofits

Director and Officer Insurance

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Directors and managers are a crucial part of any NGO or nonprofit organisation and business structure. The role comes with a large amount of responsibility, especially when controlling donations and funds towards the right cause. They ensure the company runs smoothly and the business reaches its charity goals.

However, there are always cases, even in charitable organisations, where managers may not be as honest as most believe. It takes one malicious manager to ruin the organisation’s reputation and lead to lawsuits. 

For example, a nonprofit finance manager may be stealing money from the organisation and manipulating donation costs. Investors can sue the company when they believe their investment is not used for the agreed purpose. Unfortunately, all other managers will also be held liable, even if they were unaware of the breach of duty.

Director and officer insurance for NGOs and nonprofits in Hong Kong can help protect every director and manager. The insurance will protect the liability of directors & managers from claims arising from the assumption of a breach of fiduciary duty. The insurance will only cover managers who are innocent and will not cover any criminal acts.

The policy can help protect the professionals who believe in the organisation’s purpose and do their part honestly.

Professional Indemnity Insurance

NGOs and nonprofit services are provided with the help of volunteers and the public, who help spread the message or take action for the cause. The NGO or nonprofit organisation must adequately inform volunteers, the local governing departments and the public about the service and ensure they are safe.

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There can be situations where one may be harmed financially or physically due to NGO or nonprofit negligence.

For example, a dog rescue shelter does not provide its client/customer with enough information about the dog they are fostering. The dog then bites them and is violent; the customer/ client can then sue the NGO for not providing enough information and misrepresenting.

There are countless examples of NGOs & nonprofit’s negligence and errors that can lead to lawsuits. It is tough to run such businesses, especially when dealing with a large amount of donors or volunteers. 

Hence, professional indemnity insurance for NGOs & nonprofits in Hong Kong is vital. The insurance will financially cover any liability claims due to negligence or errors. Mistakes can happen in any organisation; therefore, proper protection is crucial to continue to help the purpose.

Public Liability Insurance

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In many instances, NGOs and nonprofits work out of locations such as shops, clinics, hospitals, schools, beaches, etc. When inviting the public to the location, the organisations are liable for the public’s and the local environment’s safety. However, there are always public liability risks when dealing with the public.

There are various chances the public may be injured at the premises or the charity business activity will cause property damage. In either case, the third party may sue the organisation for medical, repair and compensation costs.

For example, a volunteer accidently causes property damage while promoting the NGO business. Another common example could be a slip and fall on the nonprofit premises, resulting in a severe third-party injury. Dealing with public liability lawsuits can be expensive and disturb the organisation’s budget.

Public liability insurance for NGO and nonprofit organisations in Hong Kong can help deal with third-party risks. The insurance will cover the costs related to third-party injuries or property damage claims due to the premises or business activity.

Public liability insurance can be a lifesaver as the claims can arise at any point, even when an organisation may believe they are safe.

Cyber Insurance

NGOs and nonprofits deal with many donations, partner businesses and investment data. Each donation or investment has sensitive data such as credit card details, emails, addresses and user profiles. The organisations are trusted to keep this data private and are liable to protect it.

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Cybercriminals are aware of the amount of data saved and do not hesitate when attacking even such organisations. In fact, many nonprofits and NGOs neglect cybersecurity, making it easier to attack and breach data.

The cyber-attack could occur in the form of a fake donation (phishing email), ransomware, AI attack, or even hacking. Hence, Cyber insurance for NGOs and nonprofits is vital in today’s digital generation.

The insurance will cover cyber experts’ advice, threat removal, data recovery, third-party communication, ransom costs and financial loss. However, the insurance will not cover any organisation without cybersecurity.

Personal Accident Insurance

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Volunteers are a big part of running an NGO or nonprofit organisation. They commonly either work part-time or during events to help provide charitable services. While working for the organisations, there is a chance of injuries, which the NGO or nonprofit will be liable for.

The work injuries could be anything such as deep cuts during a beach clean-up, injuries while building, falls at the premises and many more. Each organisation has different work injury risks that depend on the service provided.

The organisations must protect their volunteers the best they can, which includes work injury expenses. It is important to understand that employee compensation insurance will not cover volunteers or part-time staff; hence, a different policy is needed.

Personal accident insurance for NGOs and nonprofit volunteers in Hong Kong is crucial. The insurance will cover most injuries that occur while the volunteer is working for the organisation. The insurance will cover medical and compensation costs. In addition, any organisation can purchase the policy for short periods to cover events and part-time work.

Why Insurance for NGOs & Nonprofits Is Crucial?

The proper combination of insurance is one the best ways to protect NGO and nonprofit organisations from various risks and unpredictable situations. 

Insurance for NGOs and nonprofits provides organisations with the ideal financial protection. The insurance will take care of the financial factor of dealing with risks. Hence, the organisations do not need to dip into their donation or funding to recover. 

NGOs and nonprofit organisations should concentrate on their company purpose and less on these possible risks. Therefore, having the right coverage beforehand is the ideal way to focus on the generous service. However, it is essential to understand each risk related to the organisation.

NGOs and nonprofit organisations in Hong Kong are vital to the city and the community and must be protected with the best policies.

 

 

To Learn More about insurance for NGOs or Nonprofit organisations in Hong Kong and Asia, contact Red Asia Insurance.