Why you should consider D&O coverage:
Directors and officers of nonprofit organizations now face virtually the same exposures to lawsuits as do corporate directors and officers. Among nonprofits, the most frequent allegation involving board liability is employment practices – wrongful termination, for example, or discrimination in hiring practices. Traditional, commercial general liability insurance usually does not respond to such allegations, or to most other legal actions nonprofit boards are likely to face.
The minimum premium for D&O coverage available through CIMA is $800 for a $1 million limit of liability. We can have a proposal to you within one week of receiving your completed application, in most cases.
Key features of coverage available through CIMA:
- All past, present and future directors, officers, employees, volunteers, trustees, committee members, independent contractors and the entity itself are covered. What’s more, the severability feature protects all the remaining insureds if it transpires that any individual insured provided false information on the application.
- The standard limit of liability is $1 million, and limits of up to $5 million are available.
- Deductibles begin at $500. You can select a higher deductible, and therefore lower your premium, if you wish.
- Broad coverage, including employment practices liability. Wrongful termination; failure to hire or promote; discrimination, including sexual harassment; and other such practices are covered. So are claims alleging mental anguish and emotional distress. Other risk exposures that are covered include libel, slander or defamation; invasion of privacy; wrongful entry or eviction; false arrest; false imprisonment; malicious prosecution; and infringement of copyright, or trademark or other unauthorized use of title; and plagiarism or other misappropriation of ideas.
- Single combined limit, or separate. You can choose a single combined limit for all wrongful acts, or you can choose separate limits – one for employment practices liability, and one for all other covered acts.
- Punitive damages can be covered in states where those damages are insurable.
- The insurer pays all defense costs up front. You don’t have to hire attorneys or in any other way manage your own defense.
- Defense costs do not reduce your limit of coverage. Suppose, for example, you have selected a $1 million limit of coverage. Now suppose there is a judgment against you of $850,000, and legal fees amount to $200,000. Although total costs of your claim exceeded the limit of coverage by $50,000, there would be no “gap,” no uncovered expense, with our coverage. In fact, you still would have $150,000 available should there be a second claim during the coverage period.
- “Claim” is defined very broadly. A “claim” is triggered as soon as you receive written notice that someone intends to hold you responsible for a wrongful act. When the claim is triggered, so is your defense.
- Prior acts are covered.
- The policy cannot be canceled by the insurer except for nonpayment of premium.
- “Two-way” extended reporting period is standard. If either you or the insurer chooses to nonrenew coverage, you automatically are provided a 60-day extended reporting period for claims, and you have the option to purchase an additional period of one, two or three years. For former directors, a three-year automatic extended reporting period is standard for employment practices claims.
(Certain exclusions may apply, depending on the individual nonprofit’s circumstances.)
Complete a brief application for D&O Liability Insurance coverage.
Leave an e-mail message requesting more information about D&O coverage.