Directors and Officers Insurance for Nonprofit Organizations

nonprofit organizations

Board members and executives who work for nonprofit organizations could face significant individual liability in the event of a claim against the organization. Nonprofits need to protect their board and executives with an insurance policy that will address their individual risk exposure.

Coverage Inclusions

One of the most important non profit D&O considerations is whether to elect a standalone policy or whether the coverage limits will be aggregated with other types of liability protections in a package policy. If it’s aggregated, all of the coverage for directors could be depleted by other types of claims against the organization. A standalone policy will provide a single amount of the organization’s choosing that will apply specifically to claims made against directors and officers.

Amounts of Protection

The amount of protection that you need may depend on your organization’s assets and activities. You could choose a standard policy in the amount of $1,000,000 up to $5,000,000.

Litigation Costs

One of the most expensive implications of a claim against an organization or its directors and officers is the legal cost of defending a claim. Typically, an insurance carrier that offers comprehensive protection will pay all of the legal costs as soon as the claim is initiated.

Sufficient directors and officers’ insurance is an integral part of a nonprofit’s insurance package. Being able to protect board members and organizational officers from liability is essential for both board recruitment and staff engagement.