Relax & Give, we’ve got your back. Liability Insurance for Directors & Officers of Not-For-Profits

By: Denise Koslowsky


Giving back to those in our communities who are less fortunate is a core belief for us here at Advocate Brokerage.  Our principals, managers and many of our staff devote time in service to local not-for-profit organizations.

We serve because we want to help those who have not been given the same opportunities and to provide hope for those who are in need. The last thing on your mind is that you might need to protect yourself from exposure to a lawsuit. Unfortunately, this is a reality.  Over the last 10 years, 63% of the claims reported against directors and officers of an organization were claims made against a non-profit.

Why not-for-profit directors and officers are at risk
The standards are high for anyone holding the position of director or officer in an organization but for those serving as part of the leadership for a not-for-profit, the standards are often higher. There are several factors that can put those serving as a director or officer at a non-profit at a higher risk.  Often times this is not their primary responsibility, they are often volunteering their time or working only part-time with the organization.  The organization may lack the formal structure of a large corporation which can unintentionally lead to a lack of excellence.  There may often be a lack of support either in info structure, staffing or finances which could hinder your ability to make sound decisions.

Potential Exposures
A not-for-profit and its Board of Directors can be sued just like any other organization for a variety of reasons such as:

  • Employment practices such as discrimination, harassment or wrongful termination
  • Fiduciary responsibilities such as waste of assets, failure to deliver or acts beyond authority
  • Libel or slander
  • Errors or omissions
  • Regulatory issues

Look at the risk
While most not-for-profit organizations do carry insurance, coverage is usually limited and even if there is an Umbrella policy in place, there may not be enough protection should a lawsuit be filed.  You could be named in the case and held liable for actions that you take on behalf of the organization.  When you take into consideration the cost of legal fees and large judgments have become, it is easy to see how you could be at risk.

The Bottom Line
Advocate’s partnership with elite insurance carriers means that we are able to offer superior coverage to our clients. Not-For-Profit Directors & Officers Liability coverage provides protection for up to five non-profit boards per household with limits starting at $1 million.  If you serve on the board of a local not-for-profit and have specific questions or want to know more about how to protect yourself and your assets give us a call at 914-723-7100, we’ve got your back.

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