Understanding the Basics of Directors and Officers Liability Insurance
Most nonprofits understand the value and importance of general liability insurance, especially given the litigious nature of our country. Unfortunately, the same can’t always be said about Directors and Officers (D&O) insurance. The men and women who run nonprofit organizations are just as likely to face litigation as board members of for-profit corporations, but very few are actually protected against such an event. To protect yourself, your board members, and your organization from financial ruin, it’s advisable to purchase D&O liability insurance from a company that provides insurance for nonprofits in NYC. This brief overview of D&O liability insurance will help you get started as you shop around for a policy that fits your needs.
Types of Coverage
All D&O liability insurance policies cover directors, officers, and possible a few key, high-level employees. When purchasing D&O liability insurance, you’ll need to choose the right type of coverage to meet your organization’s specific insurance needs. A-Side Coverage provides defense costs and liability to directors and officers in the event of a lawsuit. B-Side Coverage reimburses a nonprofit the money paid to satisfy indemnification claims made against your nonprofit. C-Side Coverage, or Entity Coverage, provides insurance for the nonprofit entity as a whole for any wrongful acts or misdoing that results in litigation.
To make sure your nonprofit organization is protected from threats on all sides, it’s important that you are aware of what’s not included in D&O liability insurance as much as you are aware of what is included. For example, many D&O policies exclude employment-related claims and non-pecuniary actions, so your organization will need to purchase separate insurance policies if there is a real concern about these and other types of excluded actions. Your nonprofit insurance broker or agent can help you customize a full set of policies, including D&O liability insurance and general liability insurance, to protect yourself and organization from financial ruin.