While some people believe that nonprofit organizations are exempt from lawsuits due to charitable immunity, the reality is that nonprofit insurance in New York City is very important for both the organization and its directors and officers. Although D&O insurance may not be necessary in every case, it can be a very important element in many others. Read on if you are wondering if your nonprofit should insure your directors and officers.
Director and Officer Liability
One of the most important aspects of running a business—nonprofit or otherwise—is being able to protect yourself in the event that a customer, investor, or other entity files a lawsuit. Depending on your specific situation and the roles of your directors and officers in making business decisions, these individual positions may be sued as well. Directors and officers held to certain standards when it comes to appropriating funds, following hiring practices, and generally abiding by workplace laws. In situations where there is bankruptcy, employee layoff, or unfair hiring, directors and officers may be directly targeted for their failure to meet their professional responsibilities. If you believe that your directors and officers may be vulnerable to such a threat, D&O liability insurance may be applicable in your case.
Affordability of Coverage
D&O liability insurance can vary greatly when it comes to price, and the rates depend on an array of factors. One important factor is risk; while high-risk companies may pay a substantial amount of money for D&O liability insurance premiums each year, low-risk companies may find this type of coverage at a significant discount. If your nonprofit is a small, private company, then you may very well find room in the budget to cover your directors and officers.
Purchasing a Policy
If you have determined that it may be in your best interest to secure D&O liability insurance for your nonprofit organization, it is a good idea to speak with a nonprofit insurance broker or agent who can help you decide exactly what type of coverage best fits your needs. Keep in mind that D&O insurance can sometimes cover your organization in addition to its directors and officers.