Directors and Officers Insurance for Charities
Not-for-profit organisations provide essential services that benefit the community and their members. To provide strategic oversight and make key decisions, many not-for-profits rely on a governing body—such as a board of trustees or directors.
However, even when acting in good faith, directors and officers of not-for-profits expose themselves to risks with each decision they make on behalf of their organisation. In the event of a claim, not-for-profit leaders could suffer severe damage to their reputation and personal finances due to their decisions. To protect themselves, directors’ and officers’ (D&O) insurance for not-for-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 cover for a variety of claims. Specifically, D&O insurance can provide legal cost reimbursement to not-for-profit leaders following allegations of wrongful acts, financial mismanagement, errors in judgement and negligence.
Peace of mind—D&O claims can come from a variety of sources, including employees, recipients of services, and donors. D&O insurance ensures that not-for-profit leaders are protected regardless of where claims originate, providing timely and effective cover.
Entity cover—A number of D&O policies go beyond protecting directors and officers and extend to the organisation itself. This is particularly advantageous, as this type of cover kicks in even if a director or officer isn’t directly involved in a claim.
Flexible limits—Most insurance companies offer a variety of cover limits for D&O policies. In some cases, these limits can go as high as £10 million, depending on the size of the not-for-profit.
Protection beyond indemnification—While the governing documents of many not-for-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 not-for-profit’s duty to indemnify is only as good as its ability to pay. This means that if the not-for-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 Not-for-Profits?
Though you may not realise it, board members can be held liable for the actions of the not-for-profit organisations they serve. In order for a not-for-profit to protect its company mission and its board members’ personal assets, D&O insurance is crucial. Contact us today to learn more.
