Nonprofit Directors' and Officers' Liability Insurance

Directors' and officers' liability insurance provides protection for allegations of improper decisions and actions. In short, the policy protects the personal assets of directors and officers when someone says they didn't perform their job properly.

Some Claims Examples:

--Allegations of improper hiring practices

--Employment or sexual harassment

--A donor is unhappy with the use of their money

--A client alleges you are not serving your mission

Call Your Agent to Review the Coverage

How much coverage do you have – what are the limits of liability?

Are defense costs included in the limit of liability?

Do you have coverage for employment practices?

Do you have coverage for prior acts?

What professional services are excluded?

What are the policy exclusions?

If You Don't Have D&O, Here Are Some Tips

The first step is to contact your own insurance agent. You may find that they have the expertise to provide you with the policy that you need.

If, for whatever reason, you're not comfortable obtaining D&O insurance from your current agent, I suggest you find an agent who has an interest in your cause.

Directors' and officers' liability insurance for small nonprofits are not particularly lucrative for an agent. Your business may not get their attention. However, an agent who is a supporter can do an exceptional job for your organization.

Another approach would be to use a board member or a strong supporter who owns a business. Have the board member contact her insurance agent, asking that the agent provide the coverage as a favor to them. Most agents will be reluctant to disappoint a good customer.

You'll have to complete an application before your agent can get quotes. Most insurers will have minimum premiums of at least $1,200. Your premium may be higher depending on your organization's mission and budget.

When your agent comes back with quotes, review the information carefully. Ask the agent to explain the coverage. Ask the same questions from the above section. Ask for a copy of the policy and endorsements. Review alternative limits of coverage and deductibles.