What is a critical insurance coverage for a non-profit and their board?

 

 

Matt worked with his first non-profit when he was fifteen. (We do so much volunteer work that we are debating moving fully to a special benefit corporation). Volunteer work holds an important place in our hearts. One of the simple rules is if it is important then insure it. One mishap and a nonprofit can lose years of progress from that lapse of judgment. Right after your articles of incorporation, the next document that your board should have is your insurance policy.

Non-profit board liability insurance, also known as directors and officers (D&O) insurance, typically covers legal fees and damages arising from lawsuits against the non-profit organization's board members and officers for alleged wrongful acts or omissions committed in their roles as leaders of the organization.

Specifically, D&O insurance may cover the following:

1.       1. Legal defense costs: This includes attorney fees, court costs, and other expenses associated with defending against claims made against the board members and officers.

2.      2.  Settlements or judgments: If the board members and officers are found liable for damages, the insurance policy may cover the costs associated with settling the claim or paying any court-awarded damages.

3.     3.   Breach of fiduciary duty: D&O insurance may cover claims related to the board members' and officers' alleged breach of their fiduciary duty to the non-profit organization.

4.     4.   Employment-related claims: This includes claims of discrimination, wrongful termination, or harassment brought against the board members and officers in their capacity as leaders of the organization.

5.      5.  Mismanagement claims: D&O insurance may also cover claims alleging that the board members and officers mismanaged the non-profit organization, resulting in financial losses or other damages.

It's important to note that the exact coverage provided by a non-profit board liability insurance policy may vary depending on the insurer and the specific policy. Therefore, it's important for non-profit organizations and their board members to review their policies. Understanding a policy’s limitations and exclusions is critical. (Kind of makes having an insurance professional on the board more valuable).

There are big rewards to volunteering and building community. Let's talk. 

Topics: Non-Profit Insurance, Directors and Officers Insurance, Liability, volunteer insurance, board liability, Wenatchee Insurance, Chelan County, Douglas County