There is a common misconception that directors, trustees and officers of non profit organizations do not have an exposure to personal liability. This is incorrect. The standards of directors and trusteees of non profits can be higher than a similar position in a for profit organization. Todays costs for non profit Directors & Officers insurance (D & O) can run under $1,000 per year while the average cost of defense and/or claim is $250,000.
Be sure to review the D & O quotes you receive carefully. Coverages differ from one carrier to the next and can be devastating to a non profit if the insurance contract does not provide the proper coverage. Look for items such as whether claims are covered for unfounded claims. Determine the type of hammer clause you are being offered. Is it a hard hammer clause or soft. This pertains to the % the carrier will pay if the plaintiff makes a settlement offer that the carrier feels is acceptable, but the insured prefer to continue litigation.
Be sure to reveiw the definition of insured, wrongful acts, loss, etc.
For more information regarding nonprofit directors & officers insurance contact our office
