You may, like thousands of other Iowans, donate time to serve as a volunteer board member on a non-profit organization. This includes churches, booster clubs, PTAs and civic organizations, just to name a few. The decisions made by board members can have a significant impact on an organization—and not always a positive one. The last thing you may want to consider is what would happen if disgruntled stakeholders of your organization file suit against you as a result of a loss. Do you know if you, as a volunteer board member, have coverage against a lawsuit under your homeowner’s policy?
What About My Homeowners’ Insurance?
Too often the only insurance volunteers have to turn to is a homeowner’s policy and, unfortunately, this policy may be of little assistance. Homeowners’ policies do not typically provide coverage from actions as a volunteer board member is the nature of the claim. The homeowners’ policy is designed to cover claims of “bodily injury,” such as a slip and fall on your property and/or “property damage,” such as causing damage to a neighboring house when you trim a large tree on your property. Typically, claims against board members do not involve bodily injury or property damage. Rather, they are usually about bad decision making that result in financial loss to the organization.
What is the Answer?
Obviously, events causing claims are unpredictable. While the reasons shown above prove it is unlikely, not all claims against volunteer board members are excluded by a homeowner’s policy. Decisions to purchase additional personal injury coverage and a personal umbrella policy can increase the possibility of finding coverage for a suit against you.
Hands down, the best method for insuring the actions of board members is for the organization to purchase a Directors and Officers (D&O) liability policy. These policies are relatively inexpensive for most non-profits. Always ask about the organization’s D&O policy before agreeing to serve on a non-profit board of directors. If there is no D&O policy you may want to decline serving on the board until a D&O policy is purchased.
Conroy Insurance Services, LLC is a local Trusted Choice® agency serving the greater Des Moines, Iowa area. We represent multiple insurance companies and can customize a D&O insurance plan to meet the unique needs of your non-profit. Let us know how we can help!