Nonprofit Boards Can Get Sued
Directors of a nonprofit organization are no less vulnerable to lawsuits than directors on public and private company boards. These board members give their time, voluntarily, toward a cause and should be protected financially in case of legal action against them in their capacity as directors. Both the directors as individuals and the nonprofit as an organization can be covered by directors and officers liability insurance, often called simply D&O.
There is no standard D&O insurance policy; each coverage is written specifically for the organization and the individuals who guide and oversee it. In some cases, a directors and officers liability policy protects only a few high-level representatives of the entity. Other policies may add management and supervisory employees for their acts and decisions.
In some cases, the directors and officers liability policy will include a deductible, while other policies do not. This may be negotiable depending on the business’s specific needs. Legal defense costs may be payable from the first dollar forward. They may also decrease the funds available for settlements, so your nonprofit needs to consider that financial exposure.
Protect the good your nonprofit does by solid executive action, excellent oversight, and quality D&O liability insurance.