The key distinction with directors and officers liability is that it is intended to cover wrongful acts that are “intentional,” as opposed to “negligent” events or acts covered under General Liability. These actions may be in error and wrong, but they are, nonetheless, “intentional” acts.
A good Directors and Officers policy should include broad coverage for all types of employment related actions, including wrongful termination, harassment, discrimination, failure to hire, etc. It should also pay defense costs as they are incurred, not on a reimbursement basis.
General Liability is the core coverage that all NIA member insureds carry. NIA does not write stand-alone Directors and Officers.
Over 25,000 nonprofits have coverage with NIA!
When you buy insurance from NIA, you get coverage that is designed specifically for nonprofits and fair pricing – so you won’t be surprised by large and unexpected pricing swings!
NIA is a nonprofit organization itself! Who understands nonprofits better than another nonprofit?
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Enhanced Coverage of NONPROFITS OWN® Directors and Officers Coverage
Summaries of key features only. Actual policy language will differ.
- Deductible options available including $0
- Policy limit $1 million: aggregate limits to $2 million
- Umbrella limits up to $10 million available
- Flat rate D&O available for nonprofits with no employees
- Defense costs outside the policy limits
More Directors and Officers Liability details...
- Prior Acts Coverage available for an additional charge
- Broad definition of member-insured including the nonprofit organization as well as directors, trustees, officers, employees, volunteers, committee members, interns, students-in-training, and spouses
- Coverage extends to third-party harassment
- Broad Employment Practices Liability (EPLI) Coverage
- Fiduciary Liability Coverage included at full policy limit
- ERISA sublimit of $250,000 included with $500,000 available for additional charge
- Breach of Contract limit $250,000 for defense
- Wage and hour law violation limit $250,000 for defense
- Punitive damages covered in states where insurable
- FREE unlimited employment risk management consultations (for insureds with D&O Coverage and EPLI)
- Employee Handbook Builder – a highly subsidized subscription to the BLR Handbook Builder annual subscription cost is $99 ($300 savings)
- Individual member vs. individual member coverage included
Flat Rate D&O
NIA’s flat rate D&O product is for 501(c)(3) nonprofit organizations with no employees. Specifically designed for nonprofits with no employees, this low-cost product provides D&O protection for nonprofit board members and the organization, but excludes coverage for any employment-related actions.
The flat rate is $600 for limits of $1,000,000. New and renewal members with no employees are eligible. General Liability is the core coverage that all of NIA’s member insureds carry. NIA does not write stand-alone Directors and Officers.
From the Claims Files
Failure to Accommodate:
A large national nonprofit serving troubled youth.
An employee with ongoing performance problems was eventually terminated, but alleged he was not given an accommodation due to stress in his personal life. Unfortunately, the employee’s personnel file was not well documented on the performance issues, and the nonprofit had not addressed the accommodation request. The employee was highly paid, and the matter was heavily litigated over a four-year period.
Because of the potential for an unfavorable jury verdict and the significant exposure to statutory plaintiff attorney fees, the claim was eventually mediated to a six-figure settlement after legal defense expenses in the six figures had been incurred.
A nonprofit focused on childcare.
Four employees claimed they had been wrongfully terminated for complaining about unpaid wages. Legal discovery revealed that the unpaid wage claims had some merit and the terminations based on performance problems would be difficult to establish.
While the four claims were eventually settled, legal defense costs to move the litigation to the point where it could be resolved were in the five-figure range. Retaliation claims are currently the most significant employee practice liability exposure to employers, for both nonprofit and for-profit organizations.
Breach of Contract:
A nonprofit focused on animal welfare.
A nonprofit was sued by a builder for breach of a construction project contract, claiming unpaid contract damages. Breach of contract claims are generally not covered in D&O policies, but NIA’s forms contain an annual $250,000 aggregate defense-cost-only enhancement. Using that enhancement, NIA was able to retain an experienced defense attorney for the nonprofit.
It took defense fees and costs in the five-figure range to get the case into a settlement posture. The nonprofit was able to obtain a very favorable compromise on the contract damage issues.
The From the Claims Files stories above are intended to be informational in nature. Please contact your insurance broker and/or agent for your specific coverage implications based on your specific situation.
Insurance Brokers: To submit business, start by filling out a Broker Appointment Questionnaire and find more information on the Working with NIA page.