Protecting Board Members

Churches, schools, and other non-profits want insightful, experienced, high-caliber individuals guiding major decisions.

 

But these individuals know that, by serving on a board, they’re opening themselves up to potential litigation in the event of an incident.

 

If a claim is related to decisions made by the board, the injured party can sue the board and its members…and that puts the assets of individual board members in jeopardy. Often times a qualified individual will not agree to participate on a board without proper insurance protection.

 

D&O Claims Examples

To provide some perspective, below are a few claims examples related to D&O liability.  

Intellectual Property: An organization filed a suit against a school and its Board of Directors for infringing upon the claimants intellectual property rights. The claimant alleged improper use of trademarked property while promoting their fundraiser. The claim settled and the total loss including defense was over $100,000.
Discrimination: A woman claimed she was denied a volunteer position was due to her sex, race and pregnant condition. She filed a lawsuit claiming discrimination. Defense costs paid to date total over $50,000.
Financial Misrepresentation: Several donors at a prominent local church accused the board of directors of misrepresentation of the financial status. Two members brought separate suits for repayment of the money lent to the church. The first case settled for $240,000. The second case settled for $75,000 and incurred $86,000 in defense costs. The total loss including defense costs exceeded $401,000.
Policy Options

Directors & Officers Liability Insurance is a specific insurance that protects the board and its individual members. It provides protection concerning financial decisions and other governing / oversight decisions.

 

Employment Practices Liability Insurance is a similar policy covering management decisions that specifically covers discrimination, harassment, and wrongful termination risk exposures.

 

For an average non-profit organization, these policies are not too costly and provide valuable peace-of-mind to the individuals who serve on the board.

 

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