It is common for members of non-profit organizations to assume board or management responsibilities without considering related risks. It is essential directors and officers carry insurance to cover liability for board and individual actions.
Why are Directors and Officers Liable?
Any organization, particularly a sportsmen or hunt club, faces the possibility someone could claim negligence or illegal activity and sue the group or individual board members or managers for damages.
A lawsuit commonly follows a serious injury, death, or incident of abuse. However, injuries aren’t the only causes for claims. Suits claiming mismanagement include those involving employment practices (wrongful termination, harassment, discrimination, etc) and fiduciary irresponsibility (mismanagement of funds and projects). If one of these situations arises, a lawsuit could land right on your organization’s doorstep.
What Does Directors and Officers Insurance Cover?
Director and officers insurance (D&O) will cover the legal costs should someone sue one of your officers. It would help pay for the cost of an attorney and other legal fees. If your board member loses the lawsuit, the insurance would pay for the legal losses up to the policy limit.
D&O insurance covers issues not included in your general liability coverage. Without this protection in place, it will be hard for your group to find qualified officers.
Are There Exclusions?
Director and officers insurance has exclusions, including damages if the lawsuit is a result of an intentional illegal action. This insurance also won’t cover a suit from one director/officer against another. Lastly, some policies exclude work related suits, like wrongful termination.
Your club is there to serve its members, a place to relax, not worry about lawsuits. Do you know the terms of your director and officers insurance? Have any of your directors/officers expressed concern about their liability risk in the past?
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