Does My Nonprofit Need D&O Insurance?

As a nonprofit director or board member, you know the struggles to find financing. Whether you couch dive for spare change, write countless grant applications, supplicate yourself to generous donators, or more than likely attempt a combination of all three, you realize the importance of making every dollar count. You definitely do not want to carry more insurance than is absolutely necessary.

One type of insurance that not many nonprofits overlook is directors and officers liability insurance, more commonly known as D&O coverage. While your board and officers are dedicated to your nonprofit’s cause, not everyone may see them the way you do. Unfortunately, not even charitable or advocacy groups are immune from lawsuits.

Two types of lawsuits are frequently brought against nonprofit organizations of all stripes. Derivative lawsuits are claims against a board member alleging mismanagement of assets. These suits are less common than direct or third party lawsuits stemming from employees, clients or other individuals asserting discrimination or damages of some sort.

Although many of these types of claims are found baseless, your nonprofit is still at risk for the court and legal fees that result in these allegations. Directors and officers liability coverage can help pay for those attorney bills and legal fees, making sure your nonprofit’s hard-found revenues continue going to work for your cause. D&O coverage can also cover the cost of settlements or legal awards should any of those lawsuits proceed through the courts and rule against your favor.

It’s important to carefully review any D&O policy before you purchase it, however. Unfortunately, many policies exclude employment related claims, which is the most common need for this type of liability protection.

If you are unsure how your board and officers are currently covered, or you simply have a question about a certain D&O policy, our agents are always available to help. We will identify any gaps in your nonprofit’s coverage, suggest better options, and even assist your organization in filing a claim. Contact us to find out how you can obtain the perfect insurance coverage for your non-profit that meets your shoe-string budget and needs.