As a nonprofit organization, your insurance needs are unique in comparison to other businesses. While you may think that a directors and officers liability insurance policy is only intended to protect large for-profit organizations, nonprofit businesses benefit greatly from this insurance policy. In actuality, the commonality of lawsuits makes a directors and officers insurance policy a vital form of protection for all businesses.
In fact, many nonprofit organizations may be more vulnerable to lawsuits. Many of the services and products of nonprofit organizations are misunderstood due to their unique characters. Likewise, when products and services are offered through for-profit businesses, there are often more clearly defined conditions and regulations.
Public benefit nonprofit organizations intend to serve the community as a whole. Examples of public benefit nonprofit organizations include museums, churches, hospitals, schools, etc. Mutual benefit nonprofit organizations in contrast, serve the members of the organization. Examples of mutual benefit nonprofit organizations include social organizations, athletic clubs, credit unions, trade associations, and more.
While the exposures of directors and officers affiliated with nonprofit organizations varies depending on the particular organization’s purpose, there are a variety of other determining factors of exposure. These include the way in which the organization operates (corporation, trust, association, etc.), their exemption from federal income taxes, the community’s investment and involvement in the organization, and additional influencing factors.
Most directors and officers of nonprofit organizations are unaware of their personal legal responsibility. In fact, many individuals fail to realize that they even have a legal duty to the organization. If you run a nonprofit organization, it is imperative that you protect your organization and yourself with a directors and officers liability insurance policy.
Contact the insurance experts at Purves & Associates Insurance Agency for all of your California business insurance needs. When it comes to nonprofits and insurance, Purves & Associates Insurance Agency knows how to operate these unique insurance policies. Allow us to provide you with the protection you deserve.