Greystone Insurance Associates, Inc. – Covering Boone, Blowing Rock, Banner Elk, Watauga, Avery and Ashe Counties
Do you sit on a board of directors? If so, are you sure that your personal assets are protected when the board of directors is sued? We generally take on this responsibility in a volunteer capacity with the opinion that it is free from personal liability exposure. In many cases, this is true; however, it can also turn into a nightmare when someone sues a board which is generally comprised of all volunteers. Having a comprehensive Directors and Officers policy with adequate limits is key to successful preservation of personal assets as well as assets of the Non-Profit. This is one of the most important policies that any board can purchase.
Directors and Officers liability coverage responds to claims alleging wrongful acts committed by your Directors, Officers, Trustees, Employees, Volunteers and Members acting on behalf of your organization.
Problems begin for a Non-Profit when contributors sue directors for a violation of duty of care. Non-Profit organizations usually don’t have the funds to pay for high legal fees to defend their Officers and Directors. A Directors and Officers policy protects the assets of Non-Profit organizations by providing first dollar defense if it is a duty to pay on behalf of the policy versus a reimbursement policy.
When choosing a Directors and Officers policy, the definition of who is an insured is a key factor. A broad definition of an insured would include the organization and any subsidiaries, past, present and future directors, officers, trustees, employees, volunteers, members, spouses, estates, heirs, etc.
Another component of a strong Directors and Officers policy is full prior acts. This responds to claims for covered wrongful acts you are unaware of at the policy inception and in many cases, includes full prior acts coverage with no retroactive date.
Strong limits of liability are a must and unlimited defense coverage in addition to the limit is recommended.
Below are some questions to consider when purchasing a director’s and officer’s policy:
- Does the definition of an insured contain broad language?
- Does the definition of an insured encompass past, present and future directors?
- Does the definition of an insured include employees, committee members, volunteers?
- Does the policy provide first dollar defense?
- Does the policy cover liable and slander?
- Does the policy defend claims seeking non-monetary losses?
- Does the policy cover discrimination?
- Is the policy a full prior acts policy?
- Is defense in addition to the limits?
- Are punitive damages covered?
Having a strong, comprehensive Directors and Officers policy gives the Non-Profit the ability to attract and keep board members. It allows board members to rest assured knowing they are protected in the case that they make an incorrect decision. The board knows that they have a Directors and Officers liability policy to defend them. This can positively impact the Non-Profit’s continued existence. In reality, a Non-Profit should never operate without a Directors and Officers policy.
If you belong to a Non-Profit, please feel free to contact Greystone Insurance in Boone, North Carolina who can provide you with valuable information on important coverages that need to be in place to protect you and your organization.
Greystone Insurance insures many Non-Profit organizations in the High Country area, including Ashe, Watauga and Avery Counties. We have seen first-hand how important it is to have a comprehensive Directors and Officers policy that is broad in scope, because we file the claims!