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D&O or General Liability coverage for Non-profit / not-for-profit group


In your experience, is it reasonable or necessary (either) to get this type of coverage for a not-for-profit?  What types of risk (primarily to board members, latterly to voluteers) should be of real concern, or is that superfluous in this situation?

Background; well structured, all volunteer, run about 10 "wine and dine" networking type events per year at various locations.  Turnover is under $50K per year total.  



Gary Spencer
Title: Managing Partner
Company: Meon
(Managing Partner, Meon) |

I really havent thought of this for companies filing form 990. It wouldnt hurt.

Tom Hoster
Title: CFO
Company: EndoGastric Solutions
(CFO, EndoGastric Solutions) |

Probably they will never happen -- the things that insurance covers, I mean -- but you buy insurance because they might. You don't have to let your imagination go too far to think of needing it: You sponsor a "wine and dine" event, and one of the participants has too much to drink and runs over a kid on a bike. The distraught parents sue everything that moves. That's when you will wish you had looked into buying insurance.

Tom Dubnicka
Title: President
Company: Dryden Business Advisory
(President, Dryden Business Advisory) |

A NFP should protect its volunteer board from litigation risk with D&O insurance. From a GL standpoint, as Mr. Hoster states, you can think of any number of scenarios where GL insurance would be needed if you are hosting events or have other services you are providing. Most insurance doesn't make sense from a probability or financial return standpoint, but you aren't buying insurance for an event that is likely to occur.

Lee Crumbaugh
Title: President
Company: Forrest Consulting
(President, Forrest Consulting) |

All the non-profit organizations I have served or managed have had this insurance to protect volunteers as well as staff. I view it as a cost of doing business for both a 501(c)3 and a 501(c)6 organization. Why would you expose directors, other volunteers and officers to this financial risk when you can cheaply mitigate it? Ditto for liability coverage - cheap protection against things you did not plan to have happen.

John Calfee Jr
Title: CEO/Owner
Company: Stop Sisyphus Now
(CEO/Owner, Stop Sisyphus Now) |

I have sat on a number of Not-for-Profit Boards over the past 25 years and while I have no "horror" stories to report, I do believe that finance types can bring a basic risk management approach to their operations. Insurance is a fertile ground for review before signing on. Has anyone evaluated the need for type and coverage for risks? Has anyone reviewed their Not-for-Profit tax status and required regulatory filings. Not filing a 990 can incur significant daily fines. Another area that is fraught with misunderstanding is the area of sales/use taxes. Many sophisticated volunteers and Board members assume that because the organization is a 501(c)3 organization, it is also exempt from collecting or paying sales/use taxes for purchases or for items sold. Not true in many cases, and whether or not exempt requires research in individual state laws. Generally speaking, most Not-for-Profit staff and volunteers can not believe that anyone would file a claim or suit on their organization because of the good it does and as a result denial of risk management will often be prevalent.


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