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Directors & Officers Liability

Non-Profit D&O

Why buy Non Profit Directors and Officers Liability Insurance?
There is a common misconception that the Board of Directors of Non Profit organizations are granted immunity from lawsuits. Although protection is provided to the Board under state law, there is no immunity from federal statutes. Most lawsuits originate under federal law. Immunity laws only protect volunteer members of the Board, but there is no protection to the Executive Director or paid employees. Finally, immunity laws only protect the individual Directors and Officers. However, most lawsuits are made against the entity itself, which will still have to provide its own defense. The average cost of defending a non profit lawsuit closed by litigation is over $147,000. Without D&O protection, most non profits are forced out of operation.

Who should buy Non Profit Directors and Officers Liability Insurance?
Regardless of size, all non profits need this important coverage. According to the latest surveys almost 80% of the litigation against non profits are brought by employees. Non profit policies will generally include employment practices protection for no additional charge. The classes of business with the highest frequency of claims are:

Social services organizations
Country clubs
Membership organizations
Trade associations
Schools
Healthcare providers
Condominium/ homeowners associations

Claim
A country club was sued after it refused to allow a member the use of a golf cart after torrential rains soaked the course. The member sued under the Americans with Disabilities Act (ADA) alleging he was discriminated against because his physical limitations would not allow him to walk the golf course. The club testified that by allowing the use of the golf cart the member would have called thousands of dollars in damage. The club was acquitted of any wrongdoing, however it expended over $70,000 in defense costs.

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Directors & Officers Liability