With non-profits needing to tighten their belts to survive, D&O insurance often comes up in the cutting room as a possible area for savings, meaning it can be let go of without much regret.

However, Susan Bradshaw, vice president for marketing, member and broker services at the Non-profits Insurance Alliance Group said that especially in these tough times, D&O insurance is needed to protect organizations from employment related legal battles.

“We know that more than 95% of claims filed against D&O policies are related to wrongful termination, harassment, or discrimination, and so forth. And add to that, during economic downturns, there is an increase overall in the number of employment-related disputes as employers downsize and those fired or laid off find it harder to find employment,” Bradshaw explained in a report published by specialty publication Blue Avocado.

Furthermore, Bradshaw pointed out that one in every 10 claims costs more than $100,000, regardless of whether it was a settlement or court determined. Two of the largest claims to date were worth $500,000 and $1 million.

She also explained that it is important to carefully examine the provisions and the language of the policy to ensure that the non-profit is secured against any potential setbacks in the future, and that it is the insurer who provides coverage for the agency.

While there are non-profits that do not have regular employees, Bradshaw noted that organizations still need to look into D&O coverage since there are individuals who are reluctant to serve on non-profit boards and committees without proper coverage.

She added that breach-of-contract lawsuits have become more common and D&O insurance provides protection against such actions.

“D&O policies are different in how they respond to claims alleging breach of contract. No non-profit, no matter how small or how few employees, is exempt from this sort of lawsuit,” she further emphasized.


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