AVOIDING LIABILITY BLOG

5 Ways to Tell if You Need Directors and Officers Insurance

Nonprofit organizations are a mainstay of our society. However, as a medical professional participating in charitable work, you could be held liable for protection of your volunteers! Nonprofit board members are open to this risk when they run an NPO, and many are not aware that they may be held personally liable for the actions of the organization.

According to Risk and Insurance Management’s 2012 Cost of Risk Survey, “36% of those who purchased directors and officers insurance reported having a claim in the last 10 years. Nonprofits had the highest proportion of those reporting claims at 63%, followed by public companies (33%) and private companies (27%).”

How can you tell if you are at risk?

  1. Are you a member of a nonprofit organization? If so, you could be held liable. If your role is: volunteer,Directors and Officers, at risk, liability, nonprofit liability employee, director, or officer, you are at risk!
  2. Are you protected under the Volunteer Protection Act? As a volunteer or employee, this may be enough to prevent you from being held responsible for negligence or misconduct on behalf of the NPO. However, as a director or officer, the VPA does nothing to safeguard you in those instances. 
  3. Are your organization’s net assets lower than your personal assets? In most NPOs, this is the case, and can leave the directors and officers even more exposed to threats.
  4. Are you a board member? If so, you also have a legal responsibility to exercise due care. Your responsibilities carry extra liability!
  5. Are you following your organizations mission, by laws, and rules to the letter? If your organization has a failure in fiduciary duty, misuse of funds, or any kind of improper conduct by volunteers or employees, these suits can jeopardize the organization itself! The result? Directors and officers can be held personally liable.

CPH & Associates recommends that companies get covered through NotforProfitins.com. Coverage through NPI is backed by Philadelphia Insurance Companies, an A++ (superior) rated company by A.M. Best. Nonprofit Directors and Officers Insurance is available for, but not limited to, Alcohol and Drug Rehabilitation Center Insurance, Area Health Education Center Insurance, and Charitable Organization Insurance. Other organizations include: Counseling Centers, Daycares, English as a Second Language Programs, Food Banks, Fundraising Foundations, Goodwill Industries, Homeless Shelters, Mental Health Associations, Respite Care Centers, Tutoring Centers, Job Training, Women’s Shelters, and Youth Associations.

Learn more about liability coverage for directors and officers – NotforProfitins.com – or call CPH toll-free at 800-875-1911.

ABOUT THE AUTHOR

CPH & Associates

CPH & Associates

Over the last decade, more than 500,000 people chose CPH & Associates for liability insurance. Because our business is specialized, we are able to focus on your liability needs in a way that bigger companies are not. Our team of associates represent over 50 years of collective experience in this field, and we are able to serve a large client base while maintaining a small-office approach.

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