News & Insights


What Are My Nonprofit D&O Risks?

Although D&O liability insurance has traditionally been associated with large for-profit companies, they are not the only ones that need it in today's highly litigious society. Many people hold the common misperception that directors (including trustees) and officers of a nonprofit organization do not have a meaningful exposure to personal liability. The reality of today’s tenuous legal environment is quite the opposite. In fact, some nonprofit organizations have found it difficult to attract people to serve on their boards unless the organization has sufficient levels of D&O insurance in place. The below list represents some of today's prevailing exposures that your board members may face and that you should seek to protect against:

Allegations of Wrongful Acts:
  • Conflict of Interest or improper self-dealing
  • Acquiescence in conduct of fellow directors engaged in improper self dealing
  • Breach of Contract
  • Fraudulent conduct, reports, financial statements or certificates
  • Violation of statues, provision of articles, or by-laws

Allegations of Financial Mismanagement:
  • Inept administration resulting in losses
  • Wasting of assets
  • Sales of assets at irrational prices
  • Granting credit extensions where not warranted

Allegations of Negligence:
  • Continual absence from meeting
  • Failure to examine facts, reports, and documents before signing
  • Failure to supervise the activities of others in a proper manner
  • Shirking responsibility

Allegations of Mistakes or Errors in Judgment:
  • False or misleading reports
  • Dissemination of false or misleading materials and information
  • Allowing organization to make improper guarantees

If your nonprofit needs help to determine if your current level of coverage is appropriate please contact one of our representatives to receive a no obligation review.