Two Reasons Non-Profit Companies Need Directors and Officers Insurance

Directors and Officers insurance may seem like coverage that is mainly designed for companies that generate significant profits and face a high degree of accountability to shareholders. In reality, directors and officers for non profit companies typically benefit from having this insurance coverage as well. The following factors even make this coverage essential for directors and officers of non-profits.

 

  1. Non-Profits Still Handle Substantial Assets

 

Even if non-profits don’t generate revenue, directors and officers often must effectively manage large sums of incoming money and use those funds to meet stated objectives. Donors may have high expectations regarding the way their funds will be used or the final results that will be achieved. The claims made against directors and officers can become costly in cases of alleged waste or mismanagement of assets.

 

  1. Directors and Officers Have Little Financial Leeway

 

The officers or directors of non-profits often work for less pay than they would make performing similar roles elsewhere. Some of these professionals don’t even take compensation for their contributions. Insurance for directors and officers for non profit companies plays a crucial role in protecting these individuals against claims that could be financially crippling.

 

Other Reasons for Coverage

 

Directors and Officers insurance offers a number of other benefits that may especially prove valuable to non profit companies, since these organizations have little room for financial missteps. Companies that currently lack this coverage may be leaving themselves exposed to significant and unnecessary financial losses.