Welcome to Part 2 of our 3-part blog post series covering nonprofit insurance coverage options! As a reminder, we started this series as a preview to what RSS CEO & Owner, Aaron Hoffman, will be discussing at our nonprofit Lunch & Learn on July 23rd. If you are part of a local nonprofit and would like to attend our Lunch & Learn, please CLICK HERE. 

As we stated in the first blog post of our 3-part series, RSS is passionate about helping our clients AND giving back to our community. Having the ability to help nonprofits, who give back so much to the community, is very important to our team at RSS.

As a local insurance broker, our team at RSS is able to provide nonprofits with uniquely designed insurance plans to cover a wide range of special insurance needs. In our first blog post we talked about basic coverages. In our second post, we will dive into one of the most important professional coverage options for nonprofits: D&O Insurance coverage.

Most people wouldn’t think the nonprofit sector would have a strong need for any particular type of insurance coverage. What could go wrong? Nonprofits exist to make our world a better place, right? While it’s true nonprofits better our communities, there are many things that can go wrong within their operations, especially when it comes to the nonprofit directors, officers or board of trustees. D&O Liability Insurance Coverage otherwise known as Directors’ and Officers’ Liability Insurance protects against mistakes or negligence on behalf of nonprofit leaders.

The primary role of nonprofit directors and officers is to maintain financial stability and provide the necessary resources and environment to accomplish the goals and purposes of the organization. Nonprofit directors and officers are often faced with challenges that for-profit businesses don’t typically encounter. Nonprofits have different regulations and relationships to maintain than a for-profit business. Nonprofits also operate with less resources than most for-profit businesses, which often makes nonprofit leaders more susceptible to errors.

Below are a few claim examples in which D&O Insurance would protect Nonprofit Directors and Officers. ↓

  • Wrongful Acts: A wrongful act may include violation of a statute, improper self-dealing, conflict of interest, fraudulent financial statements, a tort, violation of the articles of incorporation of by-laws or transactions with companies in which the officers or directors have a personal interest.
  • Improper Management: Officers and directors may also be sued for improper management of the company’s finances.
  • Errors in Judgement: A D&O policy would provide coverage for the lawsuit.  Errors and Omissions Insurance is a different type of coverage that protects against human errors that result in a defect in a company’s products or services.
  • Negligence of Duties: A negligence claim can happen if the director of a nonprofit fails to file annual reports, fails to supervise, is absent from meetings or fails to inspect the company’s books and records.
  • Coverage of Fines, Penalties, and Other Legal Costs

D&O Liability Insurance is an extremely important coverage for nonprofits. In fact, some might say D&O Liability Insurance is more important to a nonprofit versus a for-profit company. For more information on insurance coverage for nonprofits, please contact our office.