Nonprofit News


Lawsuit Shows Why Nonprofits May Need Insurance beyond D&O

Lawsuit Shows Why Nonprofits May Need Insurance beyond D&O

Why Professional Liability Insurance Can Be Important for Nonprofits

Monday, August 3, 2015/Categories: Nonprofit Insurance, Professional Liability Insurance, Directors and Officers Insurance

Nonprofits that work with minors, the elderly, the developmentally disabled, and other vulnerable groups should consider whether it makes sense to get coverage for risks that won’t be covered by Directors and Officers Insurance.

An NBC Los Angeles story tells of how tragedy struck a local nonprofit that helps developmentally disabled adults live normal lives by connecting them with local volunteers to teach them life skills. One of these volunteers allegedly molested a 43-year-old woman who was being helped by the organization.

The nonprofit is now being sued for negligence. The woman’s mother claims that the NPO should have had better screening practices that would have prevented this incident from happening. While D&O Insurance won’t cover this lawsuit, nonprofit Professional Liability Insurance (aka Errors and Omissions Insurance) could potentially cover the cost of the lawsuit.

Why Professional Liability Insurance Can Be Important for Nonprofits

If your nonprofit works with vulnerable populations, Professional Liability Insurance can help offer protection for abuse and molestation lawsuits. You might be thinking a lawsuit like this would never strike your organization, but remember that — as the case above shows — you can be liable for the actions of a volunteer.

The California nonprofit claims it…

  • Screened its volunteers.
  • Contacted prior employers.
  • Never heard anything that would have given it cause to question the volunteer.

Even if you follow protocol, your organization could be at the whim of its volunteers and screening processes. To learn more about other common liabilities that nonprofits have, see our Top 5 Risks for Nonprofit agencies.

What Does Professional Liability Insurance Cover for Nonprofits?

Professional Liability Insurance may offer protection for lawsuits about mistakes and oversights your organization makes while it pursues its mission. This policy may cover these risks by paying for the cost of a lawsuit and expenses accompanying legal disputes. E&O coverage can help pay for…

  • Lawyers’ fees.
  • Court costs.
  • Settlements or judgments.

Even if you “win” a lawsuit, you’ll still have to pay for your legal expenses. A nonprofit’s budget can be tight, so a lawsuit like this can be devastating for an organization without insurance.

Identifying Essential Insurance Policies for Your Nonprofit

Does your NPO need E&O or D&O? (Say that ten times fast.) Sorting out your nonprofit insurance can be tricky, but this process can be easier when you work with insurance agents that…

  • Know nonprofits inside and out.
  • Can advise you about customizing your risk management strategy for your organization.

No matter what your mission is — education, after-school mentoring, elderly care, or other areas that might require insurance for abuse lawsuits — insureon’s agents can help you find Professional Liability Insurance at a price that makes sense for your organization.


Number of views (1006)


Footer Quote