Are you covered for the decisions you make as a board member?

Are you covered as a board member?


Being involved in a non-profit organization is a rewarding and meaningful commitment. Many times these positions are not paid; people are volunteering their time to better their community and support organizations they strongly believe in. However, in today‘s world it is also important to be sure you are protecting yourself and your organization. Most people don’t realize that as a board member they may be held personally liable for the actions of the organization.

Let’s start with the basics. What is a Directors and Officers Liability insurance policy? Directors and Officers insurance is coverage for the directors and officers of a company or the organizationitself to protect them from claims which may arise from the deicions and actions taken with the scop of their regular duties. It often includes coverage for the trustees, employees and volunteers as well.

Non-profit organizations and their board members have many different exposures including alleged wrong acts such as inefficient administration or supervision, misuse of funds, improper conduct of volunteers or employees, failure to deliver services, acts beyond the granted authority, and the list goes on.

Some examples of claims are:

  • A claimant alleged that the board of directors of a senior center conspired to deprive her of use of the facilities. The case was eventually dismissed and closed with no loss paid, although legal fees exceeded $85,000.
  • A dispute involving a Humane Society board of directors arose when two new candidates were not elected. Some contended the election had not been  conducted fairly. No loss was paid, but legal expenses of more than $18,000 were incurred.

Even if your organization is not found at fault, the cost to defend your organization can be devastating for small non-profits. According to Wyatt Non-profit Organization Directors and Officers Liability survey, the average cost to defend a lawsuit is between $35,000 and $100,000.

Many people assume their homeowner’s policy will cover them, unfortunately this is not usually the case. This is why as a board member, it is important to be sure your organization has a Directors and Officers liability policy in place to protect you and your organization.

To learn more, contact VAST at 906.228.7500.

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