Directors & Officers Liability Insurance
Non-Profit Organization
A nonprofit organization is operated for the benefit of some group of persons.
Those individuals, together with employees, creditors, customers, members, state
regulators, etc, are all potential plaintiffs against directors & officers
of nonprofit organizations due to mismanagement. The fundamental responsibility
of directors & officers is to judiciously represent the interests of the
organization\'s members and other constituencies in directing the business and
affairs of the organization with in the law.
D&O insurance responds to protect an organization for the insured perils
surrounding an allegation of a wrongful act. An important feature of a D&O
insurance policy is defense costs coverage. The costs associated with defending
an allegation of a wrongful act can easily and quickly exceed $50,000.
EXAMPLE CLAIM EXPOSURES
FOR DIRECTORS, OFFICERS, OR TRUSTEES
Allegation of Wrongful Acts
- Conflict of interests
- Fraudulent conduct, reports, financial statements or certificates
- Breach of contract
- Torts
- Violation of statute
- Violation of provisions of articles or by-laws
- Improper self-dealing
- Acquiescence in conduct of fellow directors engaged in improper self-dealing
- Transactions with companies in which officers or directors are personally
interested
Allegation of Financial Mismanagement
- Inefficient administration resulting in losses
- Sale of assets for unreasonably low prices
- Wasting of assets
- Extension of credit where not warranted
- Failure to ascertain whether extension of credit is warranted
Allegation of Mistakes or Errors in Judgement
- Disclosure of material facts
- False or misleading reports
- Dissemination of false or misleading information
- Permitting organization to make improper guarantees
Allegation of Negligence
- Continual absence from meetings
- Failure to examine reports and documents before sighing
- Failure to detect and stop embezzlement of organizational funds
- Failure to file annual report
- Failure to require withholding tax
- Failure to inspect organization books and records to keep abreast of its
activities
- Failure to supervise the activities of others in a proper manner
- Failure to verify facts in official documents before sighing them and filing
them
- Shirking responsibility
If your organization has exposure to any of the items as identified, it is
strongly recommended that Directors\' & Officers\' insurance coverage be secured.
Aon Association Services, a division of Affinity Insurance Services, Inc.
