D&O insurance for nonprofits can help with board member recruitment
In today’s complex legal landscape, serving on the board of a nonprofit or charity is a significant responsibility.
With increasing scrutiny and potential for legal challenges, it’s more important than ever for nonprofits to provide robust protections for their board members. One keyway to do this is by securing comprehensive directors and officers (D&O) liability insurance.
D&O insurance for nonprofits is essential in the event of a litigation
Directors and officer insurance covers a board members legal expenses and settlements — even in cases that are ultimately found to be without merit.
But the coverage is more than just a safeguard. It’s also a strategic tool that can help nonprofits recruit and retain high-quality board members.
In an environment where legal risks are growing quickly, this protection is invaluable. It reassures current and potential nonprofit board members that they won’t be personally liable for the organization’s actions, which can be a critical factor in their decision to join.
How does D&O insurance protect nonprofit board members?
Nonprofit and charity boards are under increasing scrutiny.
Regulatory bodies and the public demand transparency and accountability, which can lead to legal challenges.
Even well-intentioned decisions can result in lawsuits, making it vital for board members to have coverage that protects them personally.
Without adequate directors and officers insurance for nonprofits, board members may be exposed to financial risk, deterring capable individuals from serving.
D&O insurance can help recruit board members for nonprofits
In my experience as an insurance broker, I’ve seen first-hand how inadequate directors and officers coverage can impact board recruitment.
Some prospective board members have declined positions, citing concerns over insufficient insurance limits.
They recognize that being on a board is a significant commitment, and they need assurance that their personal assets are protected.
This hesitation is a clear signal that nonprofits need to continuously re-evaluate their current coverage limits to ensure they are within sector norms.
D&O insurance protects board members and strengthens nonprofits
Nonprofits must ensure they have adequate directors and officers insurance to recruit board members who are talented and committed.
I strongly encourage nonprofit leaders to review their current directors and officers insurance policies and discuss with their brokers whether the coverage limits are sufficient.
By doing so, they can protect their organizations and ensure they continue to attract the high-quality individuals needed to drive their mission forward.
Sean Graham, Director, Partner, is a long-time broker with Acera Insurance who specializes in the nonprofit industry, cyber liability and directors and officers insurance.