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Benefits of D&O
Non-profit and Human Service companies have exposure to claims against managers, directors, and officers. Here are the benefits of D&O
Legal Cost Reimbursement
In the event of a claim, D&O policies can provide defense cost coverage for a variety of claims. Specifically, D&O insurance can provide legal cost reimbursement to nonprofit leaders following allegations of wrongful acts, financial mismanagement, errors in judgment, and negligence. Because D&O lawsuits can occur without warning and easily reach six figures, it’s critical that nonprofit leaders arm themselves with the right policy.
Peace of Mind
D&O claims can come from a variety of sources, including employees, recipients of services, Government bodies, and donors. D&O insurance ensures that nonprofit leaders are protected regardless of where claims originate, providing timely and elective coverage.
Most insurance companies offer a variety of coverage limits for D&O policies. In some cases, these limits can go as high as $10 million, depending on the size of the nonprofit.
A number of D&O policies go beyond protecting directors and officers and extend to the organization itself. This is particularly advantageous, as this type of coverage kicks in even if a director or officer isn’t directly involved in a claim.
Protection Beyond Indemnification
While the bylaws of many nonprofits require the company to indemnify and defend directors and officers who are sued, leaders shouldn’t expect this protection to be sufficient. That’s because a nonprofit’s duty to indemnify is only as good as its ability to pay. This means that, if the nonprofit is insolvent or not financially stable enough to cover the legal fees, directors and officers would have to cover these fees themselves.