Nonprofit Directors and Officers Liability: Not JUST for Ds and Os

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One of the most frequent requests I get as an insurance agent for the nonprofit stars is this: Find me some Directors and Officers (D&O) Insurance! And now!

While D&O is NOT the only coverage needed for a nonprofit organization, it is a vital line of insurance to have in place to protect your key decision-makers.

In this post, I will peel back the onion regarding how your D&O policy protects your organization.

First up: Who Is An Insured?

If you’re a relatively green nonprofit manager with no familiarity with crazy terms like ‘insured’, I’ll start there.

An ‘Insured’ is an entity or person who has coverage under a policy.  For example, on your auto policy, you as owner of the vehicle are an ‘insured’ because the policy will cover your liability if you cause an accident.

It would make sense that on a D&O policy, that the Directors and Officers of the organization would have coverage. They do.  But you’ll be pleased to know that a bunch of other folks are included as insureds on most available D&O policies.

Who else besides the Ds and Os has coverage under the policy?

To put it another way, if _________ was named in the lawsuit, would he, she, or it have coverage under your D&O policy? Each policy is different, so check your own. The following are possible insureds on many standard nonprofit D&O policies:

1.  The Organization:  The entity itself would have coverage and defense for a covered loss under a D&O policy.

2.  Directors, Trustees, Officers:  These are the main individuals that are concerned with the policy. One feature some companies have is that they address past, present, and future individuals in these roles–check for this handy inclusion.

3.  Employees: Did you know that one of your employees could be named in a suit that might be covered under this policy? Some insurance companies clarify full time, part time, temporary and seasonal.

4. Volunteers: Many nonprofits are solely volunteer led. Some of these volunteers do virtually the same work as a paid executive director, including major decision making and fund use choices. Volunteers are typically included under the definition of ‘insured’ in nonprofit D&O policies. An important note here: volunteers might be listed separately under the ‘insured’ definition or included under the definition of ‘employee’.

5.  Et cetera: Different insurance carriers include in their lists of ‘Who is an Insured’ other categories of human:  committee members, heirs, estates, independent contractors, staff, legal representatives, and so on.

Part of D&O providers’ attempts to differentiate themselves from one another is the inclusiveness of their definition of who is insured. One key piece of reviewing your D&O options is to get a handle of who would be covered under the policy you’re considering.

The Upshot: Focus on finding the definitions of ‘Insured’, ‘Organization’, ‘Employee’, and anything that is kind of like that. It will show you who might be covered by the policy if there’s a claim to which the D&O policy applies. Typically, broader definition=better.

[Tweet “Many of my clients are pleasantly surprised to know that more than just the Ds and Os are covered by the policy.”]

What they sometimes are NOT so happy to discover is that the policy does not cover these different individuals for everything that might go wrong.

What questions do you have about Directors and Officers Liability coverage? Drop them in the comments or reach out. 

*Disclaimer: This is intended as information only. ALWAYS discuss  your policies and insurance needs with a licensed insurance agent. Each organization is different and should be addressed by its particular needs.

We do have the ability for you to get a D&O premium indication. Click here if you’d like to grab a quote

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  1. […] want to do in order to discover coverage for a particular person or group of persons is to find the ‘who is insured‘ section of the policy.  Next, you want to check the endorsements (the policy forms attached […]

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