Directors & Officers Liability Insurance
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Directors & Officers Liability Insurance (D&O) helps protecta nonprofit against a wide range of litigation directed against its staff, from allegations of poor managerial decisions, to sexual harassment, to improper use of donor contributions (see Why D&O?).
The D&O insurance written through Affinity Nonprofits provides coverage that varies depending on the needs of the specific type of nonprofit. When shopping for D&O, talk to the specialists at Affinity Nonprofits. They can explain the risks nonprofits face and the unique aspects of our D&O policy (see Customized Coverage).
D&O can be a huge difference maker, in more ways than one might expect. With many nonprofits dependent on unpaid workers, the coverage provided by D&O can help attract a prestigious volunteer to its board of directors. It helps assure them they will not be held personally liable by the actions of the board.
Product Overview
- Eligibility
- Customized Coverage
- EPLI
- Coverage Extensions
Why Nonprofits Need Directors & Officers Liability
A nonprofit’s entire staff is essential to its success. Whether it’s the Executive Director, CFO, a salaried manager, a volunteer mentor for children, or a member of the board of directors, each helps ensure the organization achieves its goals and its mission in best serving the community.
The officers at nonprofits are often surprised to learn they are vulnerable to mismanagement lawsuits brought by third parties. These types of lawsuits are expensive to defend, and can result in serious financial loss and damage to the nonprofit’s reputation.
Mismanagement Allegation Examples:
- Unfair employmentpractices
- Mismanagement of the organization’s assets
- Inefficient administration
- Violations of bylaws
- Conflicts of interest
- Improper self-dealing
- False or misleading reports
- Continual absence from meetings
- Failure to file annual report
- Failure to detect embezzlement of funds
D&O insurance helps protect the nonprofit entity and its current and past staff members, volunteers, directors, officers, and trustees from these types of allegations—and more.
Insuring Over 100 Types of Nonprofits
Affinity Nonprofits offers D&O coverage to a wide variety of nonprofits organizations. For example, within our Social Services Connect program, we provide coverage to food banks, counseling programs, home hospice, YMCAs, job training facilities and more (see Social Services). If you don’t see a specific type of nonprofit listed below, please give us a call and we’ll let you know if we can help.
Primary Nonprofit Classes
- Social Services
- Trade & Professional Associations
- Community Associations
- Foundations
- Museums
- Aging Services Facilities
- Clubs
- Educational Organizations
- Healthcare Services
Other Nonprofit Classes
- Alumni Associations
- Aquariums
- Arboretums
- Animal Humane Societies
- Botanical Gardens
- Chambers of Commerce
- Country Clubs
- Cemeteries
- Concerts
- Festivals
- Fitness Clubs
- Fraternal Organizations
- Historic Sites
- Historical Societies
- Humane Societies
- Land Trust/Preservation
- Libraries
- Rotary Clubs
- Science & Technology Centers
- Sporting Events
- Symphony Orchestras
- Theaters/Performing Arts
- Zoos
Ineligible Risks
- Adoption or Foster Care placement services
- Churches and Religious Organizations
- Mental Health
- Pregnancy & Abortion Counseling
- Substance Abuse and Addiction Treatment Services
D&O Coverage Customized for the Nonprofit Sector
Directors & Officers Liability Insurance is unique among our product portfolio. Affinity Nonprofits works with our carrier partners to create highly customized D&O programs that offer coverage that varies depending on the type of nonprofit organization we insure.
The following is a sampling of the customized coverage found in our D&O programs. Speak to your Affinity Nonprofits representative to learn more.
Social Services
Sexual Abuse & Molestation
While most D&O policies exclude or limit coverage to nonphysical sexual harassment claims by third parties, our Sexual Abuse & Molestation coverage provides $100,000 in coverage for third party physical abuse, as well as specified coverage to the policy limit for non-physical harassment claims.
Endorsed by:
Anti-trust Coverage
The very nature of associations brings ‘competitors’ together to achieve the shared goal of advancing their industry or profession—which lends itself to possible allegations of antitrust law violations. Our policy is one of the few in the industry that provides Anti-Trust Coverage up to the policy limit to protect against this exposure.
Community Associations
Third Party Discrimination
Provided through our sister organization, Ian H. Graham Insurance, our Third Party Discrimination coverage helps protect the community association and its staff from claims brought by homeowners accused of being in violation of a community’s bylaws.
Foundations
Fiscal Sponsorship
Community foundations often act in a fiscal sponsorship capacity for other nonprofit organizations. Because these organizations are separate entities there is often confusion over whether or not the foundation is covered for their actions. Rather than remain silent on the issue, our policy specifies coverage for this unique exposure.
Endorsed by:
Museums
Provenance Liability
Provides $100,000 defense costs provision if the museum is faced with a lawsuit challenging its ownership records to a work of art. $250,000 limit available (subject to underwriting).
Recognized by:
Homes and Services for the Aging
HIPAA and EMTALA Violations
Adds a separate $100,000 sublimit for civil penalties imposed due to violations of the Health Insurance Portability and Accountability Act (HIPAA) and Emergency Medical Treatment and Active Labor Act (EMTALA).
Clubs
Third Party Discrimination
Protects a nonprofit club entity and its management from allegations of membership discrimination.
Educational Organizations
Educator’s Legal Liability
Includes coverage for failure to perform educational services; and violations of the Buckley Amendment, Uniform Student Freedom of Expression Act, Student Right to Know Act of 1991 and the Freedom of Information Act.
Healthcare Services
HIPAA and EMTALA Violations
Adds a separate $100,000 sublimit for civil penalties imposed due to violations of the Health Insurance Portability and Accountability Act (HIPAA) and Emergency Medical Treatment and Active Labor Act (EMTALA).
Employment Practices Liability Insurance (EPLI) Included
Employee-generated lawsuits are the most common and costly type of claim facing nonprofits today. Our D&O program provides EPLI to all the nonprofits we serve.
Covered EPLI claims include:
- Wrongful termination
- Discrimination
- Sexual harassment
- Retaliation
- Inappropriate conduct
- Defamation
- Invasion of privacy
- Failure to promote
- Deprivation of career opportunity
- Negligent evaluation
Directors & Officers Liability Extensions of Coverage
The following is a partial listing of some of the coverage extensions included within our D&O policy. Coverage extensions may vary by nonprofit class. Speak to your Affinity Nonprofit specialist to learn more about the coverage available for your risk.
Wage and Hour Law Claim Defense Costs
Provides defense costs for claims alleging a violation of a Wage and Hour Law including the Fair Labor Standards Act (FLSA).
- Sub-limits available up to $500,000 (subject to underwriting).
Fiduciary Liability (ERISA) Defense Costs
The policy provides a $100,000 defense costs sublimit for allegations of mismanagement of employee benefit plans related to ERISA. A separate standalone Fiduciary Liability policy with higher limits is available upon request.
Cyber Liability Coverage
Up to $100,000 provided for expenses resulting from a network security breach, including client notification, credit monitoring and a public relations firm to aid in image restoration. Separate standalone Cyber Liability policy with higher limits is available upon request.
While most D&O policies exclude or limit coverage to sexual harassment, our Sexual Abuse & Molestation coverage provides coverage for third party physical abuse, as well as non-physical harassment related claims by Third Parties.
Legal Defense Costs Paid Outside Policy Limits
Some D&O policies pay legal defense costs from inside your policy limits, which erodes the coverage amount. Our D&O insurance pays legal expenses outside the policy limits, preserving the coverage available for claim settlements and judgments. Subject to underwriting.
Nonprofit Entity Coverage
Coverage is provided for officers, directors, board members, trustees, employees, volunteers and the nonprofit entity under one policy.
