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Why To Buy Directors and Officers Coverage
For Non Profit Organizations

Why To Buy Directors and Officers Coverage For
Non Profit Organizations
  • Non Profit Director and Officer boards can be sued by donors, employees (prospective, current or former), the general public, third parties, clients, and/or government agencies.
  • The personal assets of the individual board members are at stake! Directors & Officers (D&O) insurance can help protect a board member's home, investments, or other personal assets.
  • The bylaws of the Non Profit may indemnify the Board but does not guarantee the entity has the resources to fund the cost of a claim. The financial backing of a Directors & Officers policy will ensure financial solvency to the organization.
  • Directors and Officers lawsuits can have a devastating impact on the operating budget of the Non Profit organization, and can even put the entity out of business.
  • The average cost of a Directors and Officers policy is often under $1,000 with a zero retention yet the average cost of a claim is over $100,000.
  • Directors and Officers claims are not covered under General Liability or any other policy form.
  • Corporate scandals have heightened regulation of accounting practices. The Sarbanes-Oxley Act has also impacted Non Profits.
  • The Internal Revenue Service has increased their scrutiny of Non Profits. Over 400 private foundations have been audited in the past year.
  • Directors of Non Profit boards have the same fiduciary duties as corporate board members. Non Profit Directors and Officers lawsuits may involve a variety of issues related to the daily operations of the board including:
    • Duty of Care - requires Directors and Officers to act prudently and reasonably in regard to the management of the organization's affairs
    • Duty of Loyalty - prohibits Directors and Officers from using their position in the organization to further their own personal interest

Why To Buy Employment Practices Liability
For Non Profit Organizations

Why To Buy Employment Practices Liability
                                For Non Profit Organizations
  • Employment Practices Liability covers not only actual but alleged acts of discrimination, harassment, retaliation and wrongful termination.
  • Employment lawsuits can be brought by employees as well as volunteers or third parties.
  • The average cost to defend an employment claim is $150,000. The financial ramifications of not having Employment Practices Liability Insurance can be crippling to the operations of a small non profit.
  • Non Profits are not protected under Commercial General Liability for employment lawsuits. Endorsements to a General Liability form for such coverage are generally inadequate and erode limits of liability.
  • An employer is more likely to have an employment claim than a General Liability or Property claim. Six out of ten companies have been named in a discrimination or harassment lawsuit in the past five (5) years.
  • Recent Supreme Court rulings have held that employees may win discrimination suits without direct evidence of an employer's illegal intent.
  • Age discrimination lawsuits continue to be on the rise as the baby boomer generation ages and remains in the workforce.
  • The 1991 amendments to the Civil Rights Act give employees the ability to seek jury trials, damages for mental anguish and emotional distress, and obtain punitive damage awards.
  • Three out of five former employees sue their employers every year.
  • Approximately 550 employment lawsuits are filed every day in the United States.

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