FAQs

What are some of the liability exposures faced by non-profits? Click here to see the answer.

Recent studies show that Non-Profits are especially vulnerable to litigation brought by employees. Actions initiated by current or former staff members account for nearly 81% of all claims targeting these entities. The average judgment awarded in employment-related litigation is now over $376,000. And even if the suit is found to be groundless, the organization still must incur significant legal expenses to defend itself.

Does the GoodWorks D&O product protect against harassment or discrimination allegations brought by non-employees? Click here to see the answer.

Yes. The Employment Practices Liability Insurance provisions within the policy include coverage for allegations brought by third parties. The most prevalent are charges of harassment and discrimination. Harassment is not limited to advances or requests for inappropriate favors; the definition includes activities that create a hostile or offensive work environment. Discrimination can include exclusionary or disparaging practices against a person based on their race, religion, age, sex, national origin, disability, pregnancy or sexual orientation. If an organization has a good deal of interaction with the public, it is especially vulnerable to third-party claims like those described above.

Most of our Board members have Homeowners Insurance. Wouldn’t their personal coverage protect them in the event of a claim? Click here to see the answer.

There is a possibility that some coverage for board service may be afforded under an individual’s homeowner’s insurance. Unfortunately, the extent of the protection varies based on the policy wording. Keep in mind that a homeowner’s insurance plan is written primarily for protection against accidents and property damage. It was not designed to adequately address a management liability loss. Even in a best case scenario, an individual’s homeowner policy will not extend protection to the non-profit organization or any other Board member.

Is self-insurance a reasonable alternative to purchasing D&O coverage? Click here to see the answer.

Definitely not. In the event of legal action, organizational assets earmarked to fund altruistic endeavors would need to be diverted to cover defense and indemnity (settlement, awards, judgments, etc.) costs. If these prove inadequate, the personal assets of the Board’s directors and officers may be targeted. Here is the bottom line: Board members are volunteers who are sometimes required to make difficult decisions. They should have D & O insurance to protect them. Not having such insurance can make it difficult to attract and retain good board members, who simply cannot afford to serve if they run such risk to their personal assets.

What does the term “Duty to Defend mean? Click here to see the answer.

The policy offered through the GoodWorks initiative contains a provision specifying that the insurer has an obligation to defend the insured in a suit brought by a third party. For occurrences covered by the policy, a defense must be provided even if a suit is found to be groundless or false.

Your D&O coverage highlight specifies there is no “Consent to Settle Provision.” What is the benefit to this? Click here to see the answer.

There is wording found in many management liability policies known as a Consent to Settle provision (also known as the "hammer clause" and "blackmail settlement clause"). This verbiage requires an insurer to seek a policyholder's approval prior to settling a claim for a specific amount. However, if the insured does not approve the recommended figure, the consent to settlement provision states that the insurer will not be liable for any additional monies required to settle the claim or for the defense costs that accrue from the point after the insurer makes the settlement recommendation. Our insurance policy does not contain such a provision. As a partner in the resolution process, policyholders work in tandem with our carrier’s legal defense team in determining how best to handle a claim – negotiated settlement, court trial, or some other legal remedy. This collaborative approach helps ensure that the final decision will be mutually agreed upon by both the insurance company and the policyholder.

What does “Defense Outside the Limit” mean? Click here to see the answer.

Actions brought against a non-profit organization can sometimes lead to a lawsuit. Attorney’s fees can add up quickly and erode the limit of liability on an insurance policy. In the event of an adverse judgment by the court, these legal costs will reduce the amount left to cover any awards, settlements, or restitution. By providing defense outside the limit of liability, the policy’s coverage limit will not be diluted by the cost associated with attorney fees and other related expenses.

There is an option to include Fiduciary Liability. What does this cover? Click here to see the answer.

Some non-profit organizations offer a pension, 401(k), or similar benefit plan to their employees. Individuals who have discretionary authority to manage the assets of these plans are said to have a fiduciary responsibility to the beneficiaries. Fiduciary Liability insurance protects these decision makers against allegations of negligence, imprudent investments, and other similar breaches of trust.

Can GoodWorks provide General Liability coverage for our non-profit? Click here to see the answer.

Yes. General Liability coverage protects the organization against allegations that someone suffered bodily injury, property damage or various kinds of personal injury arising from the entity’s premises, operations or products, if applicable. Contact our knowledgeable team of GoodWorks underwriters for more information.