Non-Profit Insurance: Are You Covered?

Non-profit organizations are just as vulnerable to lawsuits as private companies-except they rarely have the financial resources to deal with costly claims that their for-profit counterparts do. Instead, a non-profit's directors and officers may have to dip into their personal pocketbooks to cover legal costs. This puts Virginia non-profits, and those who work at them, in a particularly fragile position. Even if a claim against a non-profit turns out to be without merit, the expense of fighting it can be devastating.

The Necessity for Protection:

While there are no shareholders in a non-profit organization, there are stakeholders. These include the organization's members, its employees, its volunteers, and the public. Directors and officers have to answer to all these people. Their personal, private funds are at stake in the event of a liability claim, as immunity statutes may not afford them complete protection. Also, the non-profit's employees and even its volunteers are also vulnerable to lawsuits if they are proven to have demonstrated some sort of misconduct that adversely affected those making a claim. Needless to say, directors and officers liability coverage is a must for a non-profit organization.

Sample Claims:

Here are some examples of lawsuits with which non-profit organizations have faced:

• The Country Club Claim - Members of a country club sued the non-profit organization after its directors and officers chose not to extend the lease of the land that functioned as a golf course. The directors and officers spent two million dollars settling the suit.
• The Horse's Coat Claim - The new owner of a horse sued a non-profit organization that registers thoroughbreds. The owner was upset that the organization refused to register the horse due to the fact that it had excessive markings on its coat. The cost of the trial, defense, and settlement was over one million dollars.
• The Excessive Compensation Claim - One state attorney general sued a sizable, non-profit charitable organization, claiming that its trustees had received too much money for too little work; they received big bucks and didn't do enough to support the foundation's actual goals. This suit cost over five million dollars.

Obtaining Coverage:

Even if your non-profit organization is small compared to those cited above, it might still be subject to an unexpected-and even a totally unwarranted, unreasonable-claim. Even a meritless claim will warrant the hiring of lawyers. Talk to your insurance provider about obtaining directors and officers liability coverage for your non-profit. Doing so will help to protect your own finances, your employees and volunteers, and the existence of the organization itself.

For more information about insurance coverage for non-profits or for-profit businesses, call or contact Robins Insurance today.