Serving on Non-Profit Boards – Don’t Play Insurance Company!

Stew Nelson
Senior Risk Advisor

I suppose there was a time when serving on the board of a non-profit organization when you did not have to worry about being sued! Well, let me tell you that time has long passed! If you are serving on a non-profit board you must insist that they provide you with indemnification and liability coverage through a Directors and Officers, D&O, insurance policy or you are putting your personal financial assets at risk? In our very litigious society the minute something goes wrong someone will sue for any damages.

How could that be? What could go wrong you ask? Don’t we have federal and state laws that provide special statutory protection for board members volunteering their time? The answer to the last question is yes most states do have some form of protection for board members but remember in a suit you will need to have an attorney represent you to even get a case dismissed. As the budgets of most non-profits are typically very tight, where is that money going to come from? I suspect you know the answer to that and guess what? You! The average law suit is north of $100,000.

There is one alternative and that is to purchase a personal umbrella policy. (You should have one any way!) A personal umbrella will cover you for serving on non-profit boards. Some carriers like to have you list the board on the policy so be sure to ask your agent.