Do volunteer leaders of nonprofit organizations require D&O coverage?
Even though volunteer leaders don’t receive payment for their roles, their decisions and actions can majorly impact the organizations they guide. If a decision leads to negative consequences, volunteer leaders could still be held accountable irrespective of their non-paid status.
Many volunteer leaders should, therefore, consider the benefits of D&O insurance. A knowledgeable insurance agent can assist in determining if it’s necessary.
What kind of claims does D&O insurance cover?
The specific incidents covered by a D&O policy depend on the policy’s terms and conditions. Often, these policies provide coverage for situations such as:
- Conflicts of interest, whether real or apparent
- Decisions related to employment that are considered inappropriate
- Investment decisions that prove to be poor in judgment
- Disclosure of confidential information without proper authorization
- Actions characterized by severe negligence
- Actions that are in violation of the law
- Additional actions as outlined by the specific policy
Unwise business decisions that fail to adapt to market changes are usually not covered. Insurance doesn’t replace bad decision-making.
Also, knowingly committed illegal actions are also often excluded. However, if a leader unknowingly violates a policy or certain laws, the financial costs might be covered by the policy.