Benefits of D&O Insurance for Non-profits

By Axis Marketing



Non-profit organizations provide essential social services that benefit the community and their members. These organizations cannot survive without a board of directors to make major decisions on behalf of the organization.

However, even when acting in good faith, directors and officers of non-profits expose themselves to risks with each decision they make on behalf of their organization. In the event of a claim, non-profit leaders could suffer severe damage to their reputation and personal finances simply based on their decisions. In order to protect themselves, directors and officers (D&O) insurance for non-profit leaders is crucial and can provide the following benefits:

  • Legal cost reimbursement. In the event of a claim, D&O policies can provide defence cost coverage for a variety of claims. Specifically, D&O insurance can provide legal cost reimbursement to non-profit leaders following allegations of wrongful acts, financial mismanagement, errors in judgement and negligence. Because D&O lawsuits can occur without warning and easily reach six figures, it's critical that non-profit leaders arm themselves with the right policy.
  • Peace of mind. D&O claims can come from a variety of sources, including employees, recipients of services, government bodies and donors. D&O insurance ensures that non-profit leaders are protected regardless of where claims originate, providing timely and effective coverage.
  • Entity coverage. A number of D&O policies go beyond protecting directors and officers and extend to the organization itself. This is particularly advantageous, as this type of coverage kicks in even if a director or officer isn't directly involved in a claim.
  • Flexible limits. Most insurance companies offer a variety of coverage limits for D&O policies. In some cases, these limits can go as high as $10 million, depending on the size of the non-profit.
  • 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 non-profit's duty to indemnify is only as good as its ability to pay. This means that, if the non-profit is insolvent or not financially stable enough to cover the legal fees, directors and officers would have to cover these fees themselves.

Want to Learn More About D&O Insurance for Non-profits?
Though you may not realize it, board members can be held liable for the actions of the non-profit organizations they serve. In order for a non-profit to protect its company mission and its board member's personal assets, D&O insurance is crucial. Contact the Axis Insurance Group today to learn more.

Download a FREE copy of our Guide to Directors and Officers Insurance for more information on how D&O insurance a must for organizations of all sizes.

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Tags: Nonprofit, Sports & Recreation, D&O

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