Important Facts about Nonprofit Directors and Officers Liability

Most business owners assume that a nonprofit’s general liability protects their directors and officers from personal liability. While in some cases this may be partly true, there are in fact lawsuits that have arisen that specifically name the company’s director or officer. There is a wide range of lawsuits, however, that affects businesses in which these business entities could be held personal liable. For example, let’s say a disgruntled employee claims wrongful termination, or a visitor injures themselves on your client’s property. Either of these cases would be examples of a scenario in which the claimant could blame one particular person.

Nonprofit Directors and Officers Liability insurance protects your clients financially from these personal claims against them. Your clients may wonder if they really need it, or if they will ever really be held personally liable for a business error. Below are just a few examples of how they could be held personally liable.

• If they personally and directly injure someone, even if unintentionally
• If they personal guarantee some type of financial transaction that falls through
• If they fail to file nonprofit taxes correctly
• If they do something intentionally fraudulent, illegal, or clearly wrong that causes harm
• If they use nonprofit-allocated funds for personal needs

The important thing for your clients to remember is that even if a legal claim is unfounded, they still face potentially severe financial losses while trying to defend against such a claim. At Charity First, we understand these unique risks and offer Non-Profit Insurance Coverage to help you and your clients ensure protection. Please contact us today for more information about our products and services at (800) 352-2761.