Joining a Board? Make Sure You’re Properly Insured
Proper insurance coverage for directors and officers is needed by organizations both large and small. Joining a Board? Make Sure You’re Properly Insured
People don’t want to take on these types of positions if they know their personal assets could be at stake if they were to be sued. Directors’ and officers’ coverage provides that protection. Such a policy ensures that the personal assets of a director or officer of the corporation are protected.
Liability is often an issue when corporate decisions are made and somebody feels they’ve lost money or they’ve been harmed in some way.
Nonprofit organizations like social service and mental health agencies, condo associations, private schools, day care centers, churches and other religious organizations, and youth sports organizations are all examples of groups that would benefit from a directors’ and officers’ policy.
Many people want to volunteer their time on such nonprofit boards, but they may not realize they take on the legal responsibilities of these positions.
In a nonprofit setting, claims can arise from an alleged wrongful termination or a perceived mismanagement of the organization’s funds. Both can be financially devastating without a proper directors’ and officers’ policy in place.
In addition to the liability coverage it provides, the directors’ and officers’ policy will pay to defend all claims. Defending a lawsuit can cost several hundred thousand dollars. Be sure to find a policy where the defense costs are covered in addition to the limit of insurance.