Did you know that Non-profit organizations face the same risk of Directors & Officers (D&O) lawsuits as private or public companies? A single claim for a non-profit can have a devastating impact—disrupting services and operations and putting the personal assets of the directors or board at risk. If you do a vote, your board members you will tell you that they do not want to have their personal assets on the line. A Non-profit without a D&O policy could deter individuals from joining your board.
The solution is to purchase a Directors & Officers Liability policy. We often get asked for an example of a claim that a Non-profit can face.
Here is a real claims example: A non-profit organization held a fundraising event. The organization received a temporary operating fund or “float” from another organization which was to be repaid from the proceeds of the event. Unfortunately, the funds were inadvertently deposited into the insured organization’s general account by an employee and used to pay general expenses. The organization subsequently filed for bankruptcy and was unable to return the float to the lending company. A lawsuit was commenced against the insured organization and the allegations made against the directors included negligence for failing to properly supervise the employee and breach of trust. The claim was ultimately resolved by way of a negotiated settlement in the amount of $75,000. The costs incurred to defend the claim were approximately $30,000. There was no deductible applicable to the damages or defence costs.
Absolute Insurance Brokers provides Directors and Officers management liability insurance for a range of non-profit organizations including professional associations, community organizations, employments agencies, sports organizations, homes for the disabled, shelters and medical clinics, to name a few. To get a quote call us at 1-877-941-2266.