Nonprofit Directors & Officers Liability Insurance
Nonprofit Directors & Officers (D&O) Liability protects your board of directors and officers, the decision makers of your organization. There are circumstances where board members may be held personally liable for the actions of the nonprofit organization. D&O Liability insurance can help protect your board members personal assets and your organization by assisting in covering defense costs, judgments, and settlements arising from wrongful act allegations and lawsuits brought against your organization.
Do nonprofits really need this type of coverage, is it essential? The answer is YES! Without this coverage a nonprofits mission can be slowed to a halt before it ever begins, because board members will be reluctant to put their personal assets at risk.
A Good D&O policy should provide coverage related to:
· All types of employment related actions
· Accusations of mismanaged funds
· Failure to meet regulatory standards
· Wrongful termination
· Failure to perform official duties
Allegations and claims can come from employees, clients, or other third parties, such as funding organizations, government agencies, etc. Claims can range from conflicts of interest, to mismanagement of funds or fiduciary misconduct all the way to harassment and discrimination. No matter the reason, any and all of these allegations can lead to Expensive Lawsuits. If the nonprofit organization does have D&O insurance, board members personal assets are at risk!
There are two different types of nonprofit originations, each with different exposures. Public benefit nonprofit organizations, such as schools, libraries, museums, churches, hospitals, etc.; and Mutual benefit nonprofit organizations, such as credit unions, social organizations, trade associations, etc.
For more information, please read these articles on Why Nonprofits Especially Need Protection Against D&O Liability Risks and Why Nonprofit organizations need D&O insurance More Than For-Profit Corporations
Nonprofits should also consider these important Coverages:
While nonprofit D&O policy’s offer protection to your board members and those making decisions in your organization, it does not provide coverage for all risks. Nonprofit organizations should also look into these other types of coverage:
Business Owner’s Policy
Employment practices Liability
Business Auto Coverage
Employee Benefits Liability