Non-Profit Organization Insurance – It’s Not Just Nice to Have, It’s Necessary

A member of the network once said to me, “if you don’t have insurance on your non-profit organization, then you are not really in business.” She was right. Now that I have insurance, as far as I’m concerned, Afro Puffs and Ponytails, Inc. is legit and in business. The article below gives many great reasons for why non-profit organization insurance is not just nice to have, it really is necessary.

For those of you who may be looking for insurance, consider the insurance company that was very helpful when I did my search, not to mention another member, Ms. Auntaria Tennille-Johnson of The Dennis Project, Inc out of Miami, she also uses this company and kindly steered me in their direction. If you need insurance, click the banner above for a quote. ¬†You won’t be disappointed.

Directors and Officers Liability Insurance – A Must For Non-Profit Organizations

Directors and officers of non-profit organizations who generously donate their time to advance the cause of an organization created to serve the public shouldn’t have to be concerned about a lawsuit. However, at least 45 percent of non-profit organizations can expect to experience at least one directors and officers’ liability claim during its existence.

Directors and officers liability insurance therefore, has become a necessity. This type of insurance protects board members from financial loss due to alleged wrongful acts, including conflict of interest; financial mismanagement; dissemination of false or misleading information; and negligence, including the failure to supervise the activities of others and evading responsibilities. Whether or not there is an actual liability, a lawsuit filed need to be defended and legal costs will accrue whether your organization wins or loses the suit.

PLWG Insurance picA close look at who would be likely to sue the organization reveals that it is most likely to be one of the organizations’ own employees with claims of sexual harassment, discrimination, wrongful termination, retaliation, invasion of privacy, failure to grant tenure, negligent evaluation, failure to employ or promote, wrongful discipline, deprivation of career opportunity, wrongful infliction of emotional distress, and mismanagement of employee benefit plans. In fact, among other potential plaintiffs such as benefactors, members, and clients, 80 percent or more of all claims against non-profit organizations are from the organization’s own employees.

Directors and officers liability insurance has continued to evolve over the last thirty-five years from just covering officers and directors in the beginning to now covering acts by other personnel including trustees, employees, volunteers and the organization itself. The coverage includes the cost of defense which can mitigate the risk of serious financial harm to the organization and its board members. Recent data indicates that the average cost to defend a claim is approximately $150,000, and the average settlement or damage award is approximately $375,000.

Once again an organization cannot afford to be without directors and officers liability insurance in these litigious times. A half million dollar law suit can easily wipe out most nonprofit organizations. Furthermore, for an organization to be fully protected it needs directors and officers liability insurance, general liability insurance which covers injuries and damages resulting from the organization’s premises, products, and operations; workers compensation which covers a work-related sickness or injury; and a fidelity bond which protects the organization against financial embezzlement, forgery or theft.

It is imperative that board members discuss their coverage needs and options with an insurance agent with expertise in this area.

Keep up to date with timely financial and personal growth tips and strategies. Visit and You can subscribe to the monthly Financial/Personal Growth newsletter at either site as well as read and download the free articles and e-books. Will Barnes is a financial and personal growth consultant based in Illinois.

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