Directors & Officers Insurance FAQ

Applying for Coverage

Can you only apply for coverage online?

No! Our online application is the quickest way to apply for coverage, but if you prefer to complete a manual application, please contact our office at 312.987.9823 to request a paper application.

Why wasn’t I able to obtain an instant quote for my organization?

If your organization doesn’t fit within our underwriting guidelines for the online submission process (e.g. you select “Other” as the organization type), you will not be able to obtain an instant quote or purchase a policy directly through the website. These applications are submitted directly to our underwriting department through the website, and our team will be in contact with you within two business days to advise whether we can place coverage for you.

Does my organization need to have 501(c)3 status, in order to apply for coverage?

Yes. Our underwriting guidelines require your organization to have tax-exempt status in order to have coverage in our program.

Policy Details

Does D&O insurance provide for legal defense?

If you have to hire lawyers in relation to a claim, your D&O insurance can act as a legal defense policy. Though many of the cases brought against boards are thrown out, you’re still going to have to pay legal fees if a claim is filed.

What does D&O liability insurance cover?

Simply stated, D&O insurance covers damage resulting from board decisions, but not bodily injury or property damage. It is important to understand that your personal liability insurance will not protect you from your actions on a board.

What does D&O insurance cost?

One-year premium costs typically are $1,000-$1,500 for a $1 million limit of liability coverage.

Does D&O insurance have deductibles?

Deductibles can be based on the organization’s assets, and are typically between $1,500 and $5,000.

Are all D&O insurance policies similar?

Not all D&O insurance policies are the same. Because there are several types of D&O coverage, it is important that your insurance provider develops a policy appropriate to your organization and situation.

What are potential coverage options?

Coverages can include:

  • Non-Profit Directors & Officers Liability
  • Employment Practices Liability, including Third Party coverage
  • Fiduciary Liability
How do I evaluate D&O insurance companies?

Be sure to investigate the insurance underwriter and the financial integrity of that company.

Look for an underwriter company whose rating is “A” or better from A.M. Best & Co. and Standard & Poor. Choose the carrier that understands and provides the coverages and limits your organization needs.

General Questions

What is the definition of D&O insurance?

D&O insurance provides financial protection for directors and officers in case of lawsuits and claims related to the performance of their duties for the organization. Nonprofits may not realize that their volunteer board members could be held personally liable for the actions of the organization and claims made against it. That’s why it is important to protect your directors and officers from potential costs of defense, settlements and judgments arising from any claims brought against your organization.

Who does D&O insurance cover?

Nonprofit organizations can face a number of challenges that for-profit companies typically don’t encounter. Members of the board and officers of your nonprofit could be sued individually or as a group.

It may be challenging to attract and retain volunteer board members if your organization does not have D&O insurance. This is because potential members simply cannot afford to serve if there is a risk to their personal assets.

Policies usually include an organization’s executive director and a few key employees. They usually don’t include staff and non-board member volunteers or the organization itself.

What liability risks should nonprofit boards be concerned with?

Six major sources of potential lawsuits:

  1. Shareholders
  2. Current or previous employees
  3. Customers / Clients
  4. Competitors
  5. Third party groups and lobbies
  6. Government agencies such as the DOL and EPA
Can I be held personally liable for claims as a nonprofit board member?

It depends on provisions in your organization’s articles of association or incorporation. However, liabilities which aren’t indemnified by your organization or corporation can be covered by D&O insurance.

Doesn’t my state’s volunteer immunity laws cover me against any claims if I am on a nonprofit board?

There is no clear cut answer to this question. It depends on the nature of the claims or lawsuits.

Many states provide immunity from prosecution for voluntary service in a nonprofit. However, it is important to keep in mind that those laws are at the state level, and they are unique to the state in which your organization operates. Of course, volunteer service is no defense for acts of impropriety.

Know that state law does not provide immunity from federal statutes including ERISA, the Americans with Disabilities Act, Civil Rights laws and others

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