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Directors and Officers Insurance for a Nonprofit
Old 05-21-2014, 06:21 AM   #1
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Directors and Officers Insurance for a Nonprofit

I belong to a small nonprofit group, the Friends of XYZ State Park. We have about 8 active members that comprise our board, and about 50 contributing members and own no real estate or vehicles. We do things like trail clearing and small capital projects at the park with grants, when we can get them.

Our problem is that grant applications now require that we carry Directors and Officers Insurance, in addition to general liability insurance. The cheapest D&O insurance that we can find is about $700 yearly, which is coincidentally about our total income from membership. We can't seem to find a a source for insurance that is at the same scale as our on nonprofit - most policies are aimed at a much larger organization.

Any suggestions on where to seek out less expensive and more appropriate insurance?
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Old 05-21-2014, 06:36 AM   #2
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We had a similar D&O insurance issue when I was on the board of our very small homeowner's association. We couldn't find coverage for less than $1,000, so to me your $700 policy sounds like a bargain.
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Old 05-21-2014, 06:38 AM   #3
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As a president of an HOA, I would not be without it.
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Old 05-21-2014, 10:02 PM   #4
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Would prefer D&O coverage, but some states limit liability of nonprofit Directors and Officers. A foundation may accept this.

From: Law For Change - North Carolina Nonprofit Corporations
Liability of Members, Directors and Officers
Directors and officers of nonprofit corporations in North Carolina enjoy immunity from civil liability for monetary damages except to the extent covered by insurance unless the person was not acting in good faith, acted outside the scope of his/her official duties, committed gross negligence, is compensated for his/her services beyond mere reimbursement for expenses, or falls under similar exceptions listed in N.C.G.S.A § 55A-8-60.
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Old 05-21-2014, 10:20 PM   #5
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As a former corporate board member, and having been named in a (frivolous) suit, I would never sit on a board without it. Everyone knew the suit was frivolous but had the judge sided with the plaintiff, I would have been an unhappy camper without the D&O policy, unless megacorp compensated for it.

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Old 05-22-2014, 08:09 AM   #6
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Thanks for the replies.

My issue is that we are essentially eight people that pull invasive plants at the local park. We carry general liability which is about $350 a year. I can't wrap my head around $700 a year in additional liability due to the actions of our officers. To me, it seems like charging the same amount to insure a moped as an 18 wheeler.
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Old 05-22-2014, 08:36 AM   #7
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Yeah travelover, I understand that. I guess the point is, as an old boss of mine used to say: "No good deed goes unpunished." Noxious weeds be damned, but if you accidentally left a tool out there and someone cut themselves on it, or a rock was left sticking up (you're supposed to clear those nasty rocks, dontcha know) in today's world you may be targeted for a nasty lawsuit. Sad, but true.
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