Running a non-profit organization is demanding. In addition to performing your normal daily function, you and your executive colleagues have to constantly be wary of legal action from individuals or other organizations. After all, as a board member or executive of a non-profit, you assume responsibility for the way your organization is ran and expose yourself to any legal actions against the organization. To protect yourself and your organization from litigation and the losses sustained during legal proceedings, purchase D&O insurance from a non-profit insurance provider in New York City. Read the following answers to common questions about D&O insurance to determine whether it is right for you and your organization.
Why are Directors and Officers Sued?
Directors and officers are sued for a variety of reasons connected with their positions within the organization. Misuse of organization funds, misrepresentation of organization assets, and failure to comply with workplace laws are just a few of the many reasons executive members are sued by investors, employees, vendors, and other non-profit organizations. Even the act of hiring employees exposes directors and officers to employment practices litigation. In fact, a 2008 survey from TowersPerrin found that 40% of all reported D&O claims involved employment practices.
How Much Do D&O Lawsuits Cost to Settle?
Although the cost of D&O insurance for non-profits varies and is based on different factors, it is by no means cheap. However, it is worth every penny. The Insurance Information Institute reports that smaller private companies and non-profit organizations could pay as little as $500 per year per million in premiums. Depending on the size of your organization, this could amount to large annual premiums, but it is small compared to the potential losses incurred as part of a D&O lawsuit. A survey sponsored by Chubb found that 12% of 451 U.S. companies and non-profit organizations had experienced a D&O lawsuit within the past five years, and the cost to settle and/or litigate those cases averages $225,682. Some companies and organizations reported losses approaching $5 million, the survey found.
Although your non-profit organization may not be required to offer health insurance to your employees, it’s a great way to show your appreciation, attract highly skilled applicants, lower employee turnover, and keep your employees healthy and happy. Group non-profit insurance policies give your organization complete control of the cost and design of the benefit. Depending on your organization’s operating budget and workforce, decide whether group health benefits will be available to employees and dependents or employees only. You should also develop eligibility criteria that encourages employee retention, such as a waiting period for new hires or eligibility based on hours worked.
It is also important that you purchase group health insurance from an insurance provider that specializes in non-profit insurance policies. Non-profit insurance providers in New York City understand the unique demands and constraints faced by non-profit organizations, which means you will be offered only the policies you absolutely need.
Running a non-profit organization is a great way to give back to the community and help the less fortunate. However, that doesn’t mean running a non-profit organization is easy. On the contrary, non-profit organizations can be incredibly difficult to run successfully. In addition to local and federal requirements and standards for non-profits, there’s also the matter of insurance needs for non-profit organizations. Here is a look at two of the most important insurance policies for non-profits: Group health insurance and D&O insurance .
Group Health Insurance
If you run a non-profit organization, offering health insurance to your employees is a great way to show your appreciation. While no non-profits are obligated to provide benefits for part-time employees, non-profit organizations are encouraged to provide health insurance to permanent, full-time employees who work more than 30 hours per week. Organizations that have more than 50 full-time employees need to purchase group health insurance or risk a penalty. Group health insurance policies for non-profits are available at low rates to suit your organization’s needs.
Director & Officer Insurance
D&O insurance is a type of liability insurance designed to protect directors, officers, and other executive personnel within a non-profit organizations from litigation. When a person becomes a board member or executive of a non-profit organization, he or she assumes a level or responsibility for the organizations and its actions. This means executive personnel are exposed to claims for not running and managing the non-profit organization successfully. While D&O insurance doesn’t give your organization license to act irresponsibly, it can help cover the losses sustained during certain legal proceedings.
If you run a non-profit organization, look for an insurance firm that specializes in providing group health and D&O insurance policies for non-profits in New York City. This will ensure that all of your needs are met, and that you receive the perfect insurance policy to cover your non-profit organization.