Directors & Officers (D&O)/Employment Practices Liability
What is Directors & Officers coverage?
The Directors & Officers Liability (D&O) policy is probably the most misunderstood policy of a fraternity’s or sorority’s insurance program. Many confuse the policy with General Liability which covers bodily injury, property damage, and personal injury claims even if brought against a director or officer. A D&O policy protects an organization and its individual officers and directors for a wide variety of possible claims ranging from malfeasance by an officer in his or her fiduciary duty to the organization, third-party discrimination, and, where applicable, employment issues. The RSUI D&O policy was designed by Holmes Murphy to ensure that the unique exposures of a fraternal organization are addressed.
Why is non-profit D&O insurance important?
In today’s litigious society, the savvy non-profit entity recognizes the need for D&O Liability Coverage. These are the facts:
- Non-profit organizations are not immune from costly litigation.
- Employment-related suits, such as harassment and wrongful termination, are at an all-time high. Coverage for these claims is not provided by the General Liability or Workers’ Compensation coverage of the chapter or house/alumni corporation.
- Directors and officers are subject to duties of diligence, obedience, and loyalty and can be sued for negligence in the performance of those duties.
- A claim could threaten the personal assets of directors, officers, and trustees.
- The financial burden of defending a D&O lawsuit can drain a non-profit organization’s badly needed resources.
We offer a D&O product tailored for the unique needs of a fraternal organization
- Modification of the Insured v. Insured exclusion to ensure a national organization is properly protected against claims brought by local affiliated organizations or members.
- Amended settlement clause
- Coverage to defend breach-of-contract allegation
- Coverage for crisis management expenses
- Coverage for a loss arising from a fiduciary claim
- Coverage for the cost to defend a claim related to a violation of the Fair Labor Standards Act
- HR Loss Prevention services
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Who brings claims against non-profit organizations?
- Donors who feel their contributions have not been used to further the expressed aim of the organization.
- Board members who disagree with a majority decision on the use of funds.
- Members of the organization who believe they have been wrongfully expelled from the organization.
- Employees of local chapters and national fraternity alleging wrongful termination, discrimination, or harassment.
Don’t fall prey to the following misconceptions
- A non-profit organization is well protected with a traditional corporate D&O policy.
Probably Not: Policies not written specifically for non-profits usually have too many exclusions and limitations to provide the necessary protection.
- Comprehensive General Liability insurance fully covers D&O claims.
Definitely Not: Comprehensive General Liability insurance provides limited coverage in the typical D&O claims situation. For example: Directors and trustees usually are not afforded coverage, and many carriers are excluding employment-related claims altogether.
- State enacted legislation offers complete protection from D&O claims.
Not Really: These statutes provide only limited protection on a state level and no protection for violations of federal law.
What you need to know about Directors & Officers Coverage
A premium indication for coverage can be obtained by contacting
Holmes Murphy Fraternal Practice
13810 FNB Parkway Suite 300
Omaha, NE 68154
Phone: (800) 736.4327
Fax: (800) 328.0522