Risky Biz – Nonprofit Board Service

From the moment you get up in the morning until you go to bed, everything has the potential for risk. Any time your actions could cause injury or loss to someone else, you’re exposed to the possibility of a lawsuit. The nature of your actions determines what type of insurance you need to cover the exposure.

Your personal liability insurance (part of your homeowner’s policy) excludes business liability. Your work for your church, the Boy Scouts, or with your local Rotary Club is not a business activity. Therefore, most homeowner’s insurance policies (and umbrella insurance) will provide protection—as long as the allegation is within the scope of the policy.

If you’re working with a Girl Scout group and accidentally injure another volunteer you’ll be covered under the “bodily injury” protection in most homeowner’s policies. However, if you were sued for discrimination as a member of the board of the local Girl Scout council, you’ll have no coverage: discrimination isn’t included in most homeowner insurance policies.

The solution is a policy purchased by the organization you’re volunteering for, directors’ and officers’ insurance. I won’t serve on volunteer boards of directors unless the organization buys directors’ and officers’ insurance.

The policy pays for wrongful acts including poor decisions, employment issues (discrimination, harassment, wrongful discharge), and other events that don’t result in bodily injury or property damage.