Your trusted insurance advisor.

July 25, 2013
Are You Adequately Protected Under Your
Current D&O Insurance Policy?
 

Unexpected financial losses due to a sudden claim or lawsuit can threaten the bottom line - and, in some cases, the very existence - of a non-profit organization. According to the Nonprofits Insurance Alliance Group, approximately one in 25 nonprofits will have a Directors and Officers (D&O) claim filed against them in any given year. Because these claims can be very costly, insurance specialists at Total Management are recommending higher limits of D&O insurance as the basic limit of $1,000,000 may not be sufficient to meet the high costs of defense and indemnity in adverse judgments.

 

"Unwise decisions have the potential to ultimately hurt a nonprofit's economic sustainability," said Philip S. Bilello, CIC, owner of Total Management Corporation, a Hempstead, NY-based independent insurance agency. "At times, nonprofit directors, officers and trustees have a more challenging time managing matters as effectively as those in for-profit business corporations, due to fewer resources and limited budgets. D&O insurance protects an organization from the risks surrounding allegations of a wrongful act, wrongful termination, discrimination, financial mismanagement, negligence, or errors in judgment."

 

"Any one particular claim can trigger a lawsuit that will not only financially damage the not-for-profit, but also threaten the personal assets of the directors, officers and trustees," noted Mr. Bilello. "A misconception among board members at some non-profits is that a general liability insurance policy covers D&O liability lawsuits, but that is simply not the case. Claims such as wrongful termination and discrimination are excluded from this type of policy."  

 

Because D&O insurance policies vary, it is important to verify that both the individuals and the organization are covered, and that a separate limit of coverage for employment practices is included. Some of the most desirable provisions of D&O coverage for not-for-profits should include:

  • Broad Named Definition of Insured
  • Full Prior Acts Coverage
  • Broad Definition of Wrongful Act
  • Full Entity Coverage
  • Separate Limit of Employment Practices Coverage
  • Non-Employment Discrimination Coverage also known as Third Party Coverage
  • Duty to Defend
  • Defense Expenses outside the Limit of Liability
To secure the most appropriate and financially advantageous D&O insurance coverage for your organization, it is important to work with a broker who fully understands the insurance needs of your organization. To learn more, please contact Phil Bilello at (516) 342-4876, [email protected], or Pat Hoffman at (212) 971-7234, [email protected].   

About Total Management Corporation

Total Management Corporation (TMC) is a Hempstead, NY-based independent insurance agency that provides customized personal, business, not-for-profit/social service, and life & health insurance coverage from major insurance carriers. For more information, visit www.tmccompany.com. 

 

Total Management Corporation
14 Front Street, Hempstead, NY 11550
Tel: 516-292-4141
Fax: 516-292-4170