Many nonprofit professionals, especially those at smaller organizations, believe they’re not at risk of facing a directors and officers (D&O) liability claim. These claims typically allege poor managerial decisions that lead to adverse financial consequences. Nonprofit directors or officers are legally responsible for the day-to-day decision-making of their organization and therefore can be held personally liable for any breach of duty. This puts their personal assets in jeopardy in the event of a claim or allegation.
Common D&O claims made against non-profit organizations include:
Inefficient administration or failure to adequately supervise the director, either of which results in financial loss.
Fraudulent conduct, reports, financial statements, or certificates.
Failure to maintain adequate insurance protection.
Failure to adhere to board bylaws.
Failure to file an annual report.
Claims resulting from:
Donors alleging misappropriation of funds or misrepresentation of the financial status of the organization.
Employees or volunteers alleging discrimination, harassment, wrongful termination, retaliation, and/or hostile work environment.
Governmental agencies due to violations of the law (e.g., misuse of grant money or funds, operating outside of their charter, conflicts of interest, or attempts to influence legislation beneficial to the institution).
Members alleging financial loss.
Beneficiaries or recipients of the organization’s services involving discrimination and harassment.
Third parties alleging financial loss or infringement of property rights, trademarks, or patents.
These types of allegations may be more common and more costly than you might think. ERIE’s Directors & Officers Liability Coverage offers superior protection.
This protection has a broad definition of “insureds” that includes:
Your nonprofit organization.
Your nonprofit organization’s directors, officers, and committee members.
The employees, executive officers, and volunteers of your nonprofit organization.
The past directors and officers along with their estates, guardians, legal representatives, heirs, and assigns.
The spouses of those listed above.
This protection has a broad definition of “claim” that includes:
Written demands for monetary damages or non-monetary relief.
Civil, judicial, administrative, or regulatory proceedings.
Civil, administrative, or regulatory investigations.
Arbitration proceedings or any other dispute resolution proceedings.
This protection includes broad defense coverage that:
Provides costs that are in addition to your limit of liability.
Offers coverage for defending against an allegation of dishonesty and/or fraudulent or malicious acts—even if that allegation is groundless, false, or fraudulent.
Applies when there is a breach of contract allegation.
Applies when there is a claim alleging that someone at your organization gained a profit or financial advantage they’re not legally entitled to.
This protection includes broad coverage for claims arising from:
When someone at or affiliated with your organization sues someone else at or affiliated with your organization.
Securities laws violations (for example, illegal sale or purchase of stocks or securities).
Salaries, compensation, or bonuses of employees or the directors and officers voted on by the Board of Directors.
The coverage also includes:
Excess coverage for an insured who serves in an outside nonprofit or charitable organization.
Coverage that does not necessarily bar other insureds from coverage if one insured is barred from receiving coverage.
No absolute consent-to-settle provision that requires you to settle out of court if you’d rather litigate.
A five-year basis extended reporting period for no additional premium (Unlimited Extended Reporting Period is available for an additional premium).
Protect your organization and the people in it with ERIE’s Nonprofit Directors & Officers Liability Coverage. Premiums are very affordable for eligible organizations.
Annual Coverage & Annual Premiums
$300,000 – $200
$500,000 – $300
$1,000,000 – $320
$2,000,000 – $480
Coverage is only available when packaged with ERIE’s General Liability Coverage. Rates above do not include General Liability Premiums and will vary depending on the organization’s operations. Not all entities are eligible for this coverage. Also available are Package Policies that include property coverage as well as fidelity bond/employee dishonesty coverage.
In addition, we can assist you with Commercial Auto, Workers’ Compensation, Special Events, and Group Employee benefit programs.
Please contact us today to find out if your organization is eligible or to request YOUR Liability and Directors & Officers Liability quote!