If you’ve ever wondered about Directors & Officers (D&O) Liability insurance for your nonprofit, Barker-Uerlings Insurance is here to answer your questions. This guest post is from Steve Uerlings.
What is Directors & Officers Insurance? Directors & Officers (D&O) Liability Insurance helps cover defense costs and damages (awards and settlements) arising out of Wrongful Acts allegations and lawsuits brought against the members of an organization’s Board of Directors, Officers, Employees and Volunteers.
What is a wrongful act? Wrongful act as defined in the policy means any: “error, misstatement, misleading statement, act, omission, neglect or breach of duty actually or allegedly committed or attempted.” Also, for Non-Profits, coverage includes employment related claims.
Does the general liability policy we already purchase cover us for those types of claims? Yes and No – Yes, it provides similar protection for the directors, officers and volunteers, but only for their acts that cause, or Bodily Injury, Personal Injury or Property Damage as defined in the policy. The Directors and Officers policy excludes these types of claims since they are covered under the General Liability policy.
Does Oregon have laws that protect directors of nonprofit boards? Yes, under Oregon Revised Statute 65.369, Liability of Qualified Directors, the civil liability for a director who serves without compensation on a nonprofit board, whose mission fits in certain defined purposes, is limited to only acts arising out of gross negligence or intentional misconduct.
Note, that the protection is only for the directors and officers of the board, not for the entity itself. Also, it is only for the civil liability or court judgment, not for the related defense costs.
What types of wrongful acts would be covered? As in most insurance claims, it is hard to say if an instance is covered until the circumstances are determined, but examples of potential covered claims would be:
- Misappropriation of funds
- Breach of duty
- Third parties
What is excluded under typical policies? Here are examples of exclusions that are found in Non-Profit D&O policies:
- Deliberate or willful violation of any statute or regulation
- Wrongful Acts committed or known prior to the policy period or renewal.
- Gaining personal profit by an Insured.
- Claims covered under a General Liability policy
- Claims against a director for service in another non-profit organization.
There are several of choices for Non-Profit Directors and Officers Insurance policies. Let us search the market and find the one right for your organization and budget. Give us a call at 541-757-1321 or 541-248-3698.
Looking for more information? Download this PDF from Barker-Uerlings for more details and for Steve’s contact information.