Defense costs average $115,000 to $150,000 for nonprofit organizations. Even in cases where the claimant dropped the claim, costs averaged $19,000. |
(800) 400-7288 (805) 646-9948 FAX (805) 646-9976
P.O. Box 1294, Ojai, CA 93024 206 N. Signal Street, Suite O. Ojai, CA 93023 CA DOI Lic #0820481 |
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Provide your Directors, Officers and Volunteers with the protection they deserve! |
Features will vary depending on the insurance company and the forms used for the policy. |
Suits against Nonprofit Directors and Organizations themselves are on the rise. Even if a suit is defended successfully, litigation is very expensive. |
Why are Directors and Officers at risk? By virtue of their positions within the nonprofit corporation, Directors and Officers are legally obligated to perform the duties of due diligence, obedience, and loyalty. Failure to perform one’s duties through wrongful acts or negligence can be cause for suit. It is not uncommon for suits alleging wrongful acts to be groundless and/or opportunistic.
What is the risk? Directors and Officers may be held personally liable not only for their own acts and obligations but for those of the organization. The organization may also be sued, putting its assets at risk. This could destroy an organization. Directors and Officers can further be held liable for putting the organization at risk.
Won’t the General Liability protect us? General Liability provides coverage primarily for bodily injury and property damage actually due to an occurrence (as defined by the General Liability policy). Only Directors and Officers Liability provides coverage for “Wrongful Acts.” The policy typically defines this as ‘any actual or alleged error, omission, misstatement, misleading statement, or “breach of duty.” (Policy definitions vary.)
Who can put in claims and for what? · Members and Volunteers can submit claims for denied opportunities, denied non-monetary compensation, hostile work environment, discrimination, harassment, etc. These are similar to the employment- related suits that are at an all-time high. (If, for example, a member has a professional or prestige interest in membership and is denied a position because of complaints of improper conduct, the organization can find itself in a sticky position.) · Employees may make claims for the same reasons that they make claims against for-profit companies. Employment Practices Liability coverage is available through the D&O policy. · Board members who are displeased with the allocation of funds or with policy decisions. · Donors who feel that their funds have not been used in the manner intended. · Beneficiaries of services who feel that they were not appropriately dealt with. · Individuals or corporations who feel they have been financially harmed by the policies or actions of the organization. · State Attorneys General who feel there has been a mismanagement of funds or other wrongdoing or conflict of interest. · Suits to limit public comment, such as SLAPP suits (Strategic Lawsuits Against Public Participation) which may result in substantial costs for organizations which take a stand on public-policy issues. |
This information is for a general understanding only and the specifics of any particular policy may vary. Consult your policy for your coverages, it is the governing legal document and supersedes any information herein. |