5 Benefits of D&O Insurance for Non-Profits

Published On: January 30th, 2018Categories: Commercial Insurance

Non-profit organizations are vital to creating community. They often provide essential social services that benefit local communities. These organizations often rely on the leadership and direction of their board of directors. And the directors are often leaned on to make important decisions that shape the future of non-profit organizations.

However, with each decision directors and officers make on behalf of the non-profit organization, they expose themselves to risk, even when acting in good faith. In the event of a claim, damage to personal reputation, and personal finances are put at risk. To protect themselves, directors and officers (D&O) insurance for non-profit leaders is crucial and can provide the following benefits.

  1. Reimbursement for legal costs. In the event of a claim, D&O policies can provide defense cost coverage for various claims. Specifically, D&O insurance can provide legal cost reimbursement to non-profit leaders following allegations of wrongful acts, financial mismanagement, errors in judgment, and negligence.
  2. Peace of mind. D&O claims can come from a variety of sources. These include but are not limited to employees, recipients of services, government bodies, and even donors. D&O insurance ensures that non-profit leaders are protected regardless of where claims originate, providing timely and effective coverage.
  3. Entity coverage. Depending on the type of D&O policy. A non-profit organization can go beyond protecting directors and officers and extend protection to the organization itself.
  4. Flexible, customized limits. Coverage limited can be customized to be aligned with the size of the non-profit organization. In some cases, these limits can go as high as $10 million, depending on the nonprofit’s size.
  5. Protection beyond indemnification. While the bylaws of many non-profits require the company to indemnify and defend directors and officers who are sued, leaders shouldn’t expect this protection to be sufficient. That’s because a nonprofit’s duty to indemnify is only as good as its ability to pay. This means that if the nonprofit is insolvent or not financially stable enough to cover the legal fees, directors and officers would have to cover these fees themselves.

For a non-profit organization to protect its mission and its board member’s personal assets, D&O insurance is a crucial insurance policy. Our team at Bryson Insurance can support your efforts in leading a conversation on Directors & Officers insurance. If you have a policy in place today, we would be happy to review and provide updated recommendations that match the current board’s needs.

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