Are you a board member, employee, or volunteer of a non-profit entity/organization? If so, you should make sure the entity or organization you are affiliated with has appropriate Directors and Officers Liability Insurance. This is extremely important for a non-profit because it helps protect both the entity AND you from a lawsuit.

What it isn’t: Directors and Officers Liability Insurance (D&O) does NOT cover bodily injury or property damage. There is no D&O coverage in a Homeowner’s policy, an Automobile policy, a General Liability policy, a Property policy, or a Workers’ Compensation policy. One possible exception is that a Personal Umbrella policy may provide some D&O coverage for the individual only.

What is it? D&O Liability Insurance covers alleged “wrongful acts” of the insured (subject to specific terms and conditions of the policy).

Who needs it? ALL NON-PROFIT ENTITIES/ORGANIZATIONS should purchase D&O insurance to protect the entity/organization, as well as its employees, directors, officers, committee members, and volunteers. Some examples of a non-profit entity may be a church, homeowners’ association, volunteer firefighters’ association, or local library district. Every non-profit has D&O liability exposure and should purchase D&O liability insurance. Additionally, ANYONE who serves or acts in any capacity on behalf of a non-profit entity may be personally liable for alleged errors or omissions. ANYONE could be YOU, whether you are an employee, a director, an officer, a committee member, or even a volunteer.

What could happen? In a word, a “lawsuit”, or a “claim”, could happen. There are many possible scenarios that actually result in an errors or omissions lawsuit against a non-profit organization as well as its employees, directors, officers, and/or volunteers. One very common exposure and source of many claims under a non-profit D&O Liability policy relates to employment. Non-profit entities frequently face claims alleging discrimination, wrongful termination, harassment, even failure to hire. Another potential non-profit D&O claim could involve a breach of fiduciary duty in which a claimant alleges misappropriation (not embezzlement) of funds and demands a return of funds donated. One of the most important features of a D&O policy is its “duty to defend”, meaning the insurance company will provide defense coverage (subject to policy terms and conditions). This is crucial. Defense costs can easily exceed the deductible on a D&O policy. Expensive legal fees have been racked up even in cases won by the insured, i.e. no monetary settlement of any amount.

What next? If you are affiliated with a non-profit entity/organization (a board member, employee, or volunteer) make sure the entity has appropriate D&O Liability Insurance for its protection AND your protection. Call your trusted choice Independent Insurance Agent TODAY at Richey-Barrett Insurance Agency for all of your church and non-profit insurance needs!