By Dawn M. Fernandez, CAS, CLP
Non-profit organizations play a vital role in our communities, but they are not immune to risks. To safeguard their assets and protect their leadership, these organizations need to consider specific types of insurance coverage: Directors and Officers (D&O) Liability Insurance, Professional Liability Insurance, and Abuse & Molestation Liability Coverage.
Directors and Officers (D&O) Liability Insurance
D&O insurance protects your board members and officers from personal liability for wrongful acts or omissions related to their duties. Key considerations include:
- Limits: Choose limits that adequately protect your leadership in case of a claim. A common approach is to select a limit that is equal to or greater than the organization’s annual operating budget.
- Side A coverage: This covers the personal liability of directors and officers, even if the organization is insolvent.
- Side B coverage: This covers the costs of defending directors and officers in lawsuits brought against the organization.
- Side C coverage: This covers the costs of defending the organization itself in lawsuits related to the wrongful acts of directors and officers.
- Deductibles: A higher deductible can lower your premiums, but you’ll need to be prepared to cover the deductible in case of a claim.
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions (E&O) insurance, protects your organization from claims of negligence or errors in your work. Key considerations include:
- Scope of coverage: Ensure that your coverage extends to all relevant professional activities.
- Limits: Choose limits that adequately protect your organization in case of a claim.
- Deductibles: A higher deductible can lower your premiums, but you’ll need to be prepared to cover the deductible in case of a claim.
Abuse & Molestation Liability Coverage
If your organization works with minors or vulnerable adults, abuse & molestation liability coverage is essential. This coverage protects your organization from claims of abuse or molestation by employees or volunteers. Key considerations include:
- Coverage limits: Choose limits that adequately protect your organization in case of a claim.
- Deductibles: A higher deductible can lower your premiums, but you’ll need to be prepared to cover the deductible in case of a claim.
D&O, professional liability, and abuse & molestation liability insurance can protect your non-profit organization from a variety of legal risks. For example, your leadership might be accused of breaching their fiduciary duty, meaning they failed to act in the best interests of the organization. Your organization could also be sued for negligence, such as causing harm due to careless actions. Additionally, you might face claims of misrepresentation, intellectual property infringement, or employment practices liability. These types of insurance provide a valuable safety net for your organization.
By understanding these types of insurance and carefully considering your organization’s specific needs, you can protect your leadership and assets from unexpected risks. It’s recommended to work with a qualified insurance agent to develop a customized insurance plan that meets your organization’s unique requirements.
Dawn Fernandez has a strong foundation in technology and education, and has dedicated her career to empowering individuals and organizations. Her expertise in adult training, coupled with her understanding of legal structures, has equipped her to provide tailored solutions and exceptional support to non-profit agencies. As a Senior Account Manager specializing in insurance coverages for these organizations, she is committed to helping them navigate the complexities of the insurance landscape.
In addition to her professional role, she is passionate about sharing knowledge and insights through content creation. Her blog provides valuable information on insurance topics, empowering individuals and businesses to make informed decisions.