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NY Directors and Officers Insurance Liability

NY directors and officers insurance is a necessary piece of every insurance program for a non-profit or for-profit organization with a board of directors.

The entire Murray Group team is encouraged to join and support New York non-profit organizations as volunteers, donors, committee members and board members.   It is our opinion that non-profit service is an incredible and cherished honor.

NY Directors and Officers Insurance

In my own personal service, I’ve come to realize that many of the giving individuals dedicated to non-profit service have little understanding of the personal responsibility and liability that comes hand-in-hand with board membership.

NY Directors and Officers insurance is a coverage designed specifically to protect non-profit board members and officers in the event the board is sued. Yes, the directors and officers of a non-profit board can be sued for the decisions they make in the course of their responsibilities as board members or officers.

You can be held personally responsible for every vote and every appropriation of funds you as a board member make.

Claim Example (this is an extremely watered down version of what really happened)

A hospital was given a large donation for the creation of a specific program within the hospital.  There was an understanding when the donation was given between the donor and the Board that it would take a matter of years, approximately 5 to 10, before the program would be created.

The Board decided, without the approval of the donor, that it could invest the endowment and use the proceeds to fund other projects.

Other the course of time, like all things, the board members changed and the program promised to the donor of the endowment was never created.  30 years later, the donor now deceased, the donor’s son contacts the Board about his father’s endowment.

The large sum is still officially listed in the organization’s financials but no one, not staff, not board members, no one is sure where the money really is.  BOOM! LAWSUIT!

So How Do You Protect Yourself?

First, don’t join a board unless there is NY directors and officers insurance (D&O, as its known in the biz) in place. NY directors and officers insurance is going to be your first line of defense as a board member in this type of lawsuit. It covers defense costs, settlements and judgments arising out of lawsuits and wrongful act allegations brought against a non-profit organization.

Second, buy a personal umbrella policyA personal umbrella policy is going to provide with at least $1 million in additional personal liability coverage above and what is provided on your homeowners/renter policy. The umbrella will provide coverage for bodily injury, property damage, and personal injury claims against you arising out of your volunteer services on a nonprofit board.

These are the policies that are going to protect you from the decisions you make as a non-profit board member.

If you’re on a board and the board does not have a NY directors and officers insurance policy or if you would like a professional review and proposal for your current directors and officers insurance policy, please give us a call at (518) 456-6688 or click here to begin the process by email.

Thank you and good luck,

Ryan Hanley, CIC

Image courtesy of David Castillo Dominici /