If you own a nonprofit organization, it is important that you run the organization in a way that carries out your mission without creating additional risks for yourself or your organization. Just like how businesses need insurance to properly protect themselves, so do nonprofit organizations. There are a number of types of volunteer liability insurance coverage available.
General Nonprofit Liability Insurance
This type of coverage protects your nonprofit against claims made that pertain to bodily injury and property damage that occur on your premises, from your operations, or from your products.
Sometimes there are gaps in a general nonprofit liability insurance policy. Because of this, it can often be smart to get a separate policy for volunteer liability. Since this plan covers things that fall outside typical liability limits, you want it to provide up to $1 million in protection.
D&O Liability Insurance
Directors & Officers liability insurance or D&O insurance provides coverage for the directors and officers of your nonprofit organization. Directors and officers are always at risk of being sued for either wrongful acts or even mismanagement of the nonprofit. Having D&O coverage can provide protection in case this occurs.
Running a nonprofit comes with many of the same risks that business owners face. Having a good volunteer liability insurance plan can make all the difference!
D&O litigation has become more and more common for nonprofit organizations in recent years. In part, this is probably due to the proliferation of new nonprofits, since inexperienced directors and officers are more likely to make good-faith mistakes that still lead to claims for damages. Paying out settlements for valid claims can be relatively inexpensive, though, especially if your organization is diligent in its selection of insurance coverage. What’s a lot more expensive is the litigation associated with contested claims. So how do you manage D&O litigation costs? It starts with your insurance coverage.
Policy Protections Against Litigation
Purchasing a D&O insurance package with litigation insurance means getting assistance with the cost of litigation when settlements are rejected or when you’re contesting the claims made. This financial protection can mean the difference between budgeting for settlement losses to avoid litigation and fighting to preserve the reputation of your nonprofit. Like regular policy provisions, D&O litigation insurance has limitations and coverage maximums, so it’s essential you work with a provider who understands the ins and outs of your nonprofit’s risk profile. That way, you’ll be able to get advice about how to effectively manage the risks that can inflate the costs of insurance and make litigation more likely. That kind of advice can be more valuable than the coverage, if it helps you steer clear of litigation entirely.