Directors & Officers Insurance is often pushed to the side because most assume that general liability will cover a lawsuit. Nonprofit D&O coverage is for employment suits brought against the corporation. These suits often fall within the following three categories: wrongful termination, harassment and discrimination. More often than not, the facts are not clear and the outcome of a Directors & Officers Liability Insurance lawsuit is left up to the interpretation of the jury and judge.
For example, an employee claims that the organization they work for has been conducting illegal business and supervisory practices, and this was the reason for their termination. The organization claims that the former employee was let go for poor performance. The former employee is awarded settlement because the organization did not have documentation to prove poor performance by the employee.
If this happened in your Non-profit Organization, would your board of directors be covered?