Who Needs DO Liability Coverage?

DO Liability Coverage

Liability insurance is a lot more nuanced than many small business owners realize. Often, policies like directors & officers insurance are a good investment even when a company is fairly small, not just after it expands into a fully established corporate entity. A lot depends on how that business is structured, what kind of decision-making power officers in the company have, and what liabilities they could wind up incurring due to those decisions. Similarly, it’s also a good idea for nonprofit companies to carry D&O liabilty coverage, especially nonprofits operating as tax-exempt entities.

What D&O Liability Covers for Nonprofits

Directors & officers coverage protects the organization from financial liability due to the decisions made by covered individuals, providing financial resources to pay for damages in the event of a covered incident. Most policies cover both good faith errors and bad faith actions that could threaten the organization. For nonprofits, this includes actions that enrich the individual at the cost of the organization, as well as actions that cause a financial loss to volunteers, the general public, or those the organization supports. For tax-exempt organizations, policies that protect against the financial costs associated with a loss of tax-exempt status due to actions taken by directors and officers are available as well. The key is working with an insurance professional who understands how to tailor the policy to your organization’s needs.