Leaders of nonprofit organizations and businesses make decisions that greatly impact the entities that they lead, and they can sometimes be held responsible for their decisions and actions. Should they do something that is wrong, they might be held personally liable for their action or decision. Directors and officers insurance helps protect leaders of nonprofits and businesses in Massachusetts from the risks that come with leading an organization.
Directors and officers liability insurance is a specialized professional liability coverage that helps protect directors and officers of businesses, nonprofits, and other organizations. Policies can help protect leaders from a variety of potential mistakes that they may make (particular coverages can vary from one policy to another). Some incidents that many policies provide coverage for include:
Just because a policy covers gross negligence, unlawful acts, and conflicts of interest doesn’t give nonprofit and business leaders a license to act illegally or have conflicts of interest. A policy might offer financial assistance if a leader is found guilty of one of these items, but financial consequences aren’t the only kind of consequence that a director or officer may face.
Most nonprofit and business leaders ought to consider getting directors and officers insurance, regardless of how large the organization they lead or where it’s located. A CEO of a major corporation in Worcester, MA and a board member of a small nonprofit in Dudley, MA may each be accused or found guilty of one of the above issues.
Often, directors and officers policies are used to protect the following types of leaders:
Deciding how much directors and officers liability insurance to purchase isn’t a simple decision. Officers’ risk exposure, the cost of an issue, and many other factors must be taken into account. A nonprofit or business that’s unsure of how much coverage to purchase should talk with an insurance agent and lawyer who can provide insights into risks and coverages. Many times, Massachusetts nonprofits and businesses settle on policies that provide millions, and sometimes tens of millions, of dollars worth of coverage, because (as lawyers can point out) potential legal fees and settlements associated with claims can be extremely costly.
Nonprofit organizations and businesses that need help finding directors and officers insurance should contact an independent insurance agent who serves Massachusetts-based organizations. An independent agent can work with an organization’s leaders and legal counsel to help determine what protections the organization wants, and then they can compare policies offered by different insurers to find one that offers those coverages at a fair rate.