Directors and Officers Insurance for Historical Societies, Museums, and Genealogy NPOs
Directors and Officers Insurance (also known as D&O Insurance or Officers and Directors Insurance) is a key component to your nonprofit insurance. This policy is important for NPOs, because it helps attract and keep high quality members on your board of directors.
But what is D&O Insurance and how does it protect your organization? D&O coverage pays for lawsuits against your directors and officers in which the other side claims your board…
- Inappropriately used funds.
- Wrongfully terminated an employee.
- Was negligent in its board-related duties.
Let’s say there’s a dispute among board members about how to use your budget. It’s not hard to imagine people disagreeing about money. Half the board wants to spend the money on a new advertising campaign and the other wants to invest in repairing and renovating your museum. Enough people vote for the advertising plan, and it passes. Months later when the advertising doesn’t yield your museum more visitors, some museum supporters are upset and sue the board.
In this situation, D&O can protect your organization from the cost of defending the board’s decisions. Without D&O Insurance, the legal fees, court costs, and lawyer’s expenses may be enough to derail your organization.
Because it offers protection for the board’s difficult decisions, D&O insurance is important for NPOs when they recruit new community members to join.