Directors’ and Officers’ Liability Insurance
Does your non-profit or charitable organization or volunteer centre have people serving as trustees, directors or officers? Do you have employees or volunteers working on behalf of your organization or volunteer centre? If so, your organization’s assets and the personal assets of those individuals may be exposed when any error, omission, misleading statement, neglect or breach of duty, employment practice violation or wrongful act such as discrimination or harassment, is alleged by a third party against a person acting in their capacity as a member or representative of the organization. In fact, in addition to naming individuals in a statement of claim, your organization or volunteer centre itself may also be named in connection with the allegations.
Volunteer Canada’s members have exclusive access to discounted Directors’ and Officers’ Liability Insurance designed to meet the specific needs of the non-profit and charitable sector.
Progressive Features and Enhanced Coverage:
Volunteer Canada has secured new, industry-leading coverage enhancements to complement our existing Directors’ and Officers’ Liability Insurance offering. Automatically included at no additional cost in the Under Our Wing Directors’ and Officers’ policy are:
- Cyber Security and Privacy Liability - $100,000 aggregate limit/year ($1000 deductible)
- Comprehe nsive Legal Expense Insurance - $100,000 aggregate limit/year
Cyber Security and Privacy Liability is one of the fastest growing areas of risk, and the non-profit sector is not immune. With Under Our Wing Directors’ and Officers’ coverage, you are now protected against claims arising out of lost or compromised electronic data. Click here for further details.
Legal Expense Insurance is designed to provide members with unlimited access to a Legal Advice Helpline, plus all reasonable legal costs involved in pursuing or defending an unexpected legal issue related to the organization (and covered within the policy). Legal costs include those related to the appointment of lawyers and expert witnesses, disbursements, court costs and more.
What is Directors’ and Officers’ Liability Coverage and do I need it?
Directors’ and Officers’ Liability Insurance provides coverage for a non-profit or charitable organization or volunteer centre and their trustees, directors and officers who may be exposed to liability through the actions of a person acting in their capacity as a member of the organization. This includes claims arising not only out of the actions of directors, officers, and trustees, but also of employees, volunteers, and committee members. Directors’ and Officers’ Liability Insurance responds when any error, omission, misleading statement, neglect or breach of duty, employment practice violation or wrongful act such as discrimination or harassment, is alleged against any person acting in their capacity as a member or representative of the organization. Directors’ and Officers’ Liability Insurance supplements the organization’s general liability insurance coverage.
Directors’ and Officers’ Liability Insurance provides coverage for claims resulting from board/managerial decisions that have adverse financial consequences. These can include claims for damages related to:
- Wrongful dismissal
- Financial mismanagement
- Employee discrimination
- Violation of duty owed to the non-profit
- Violation of provincial or federal laws
- and others
Directors’ and Officers’ Liability Insurance also provides coverage for claims resulting from the actions or inactions of any person (for instance volunteers or employees) acting in their capacity as a member or representative of the organization. These can include claims for damages related to:
- And others
The costs of defending claims and the damages awarded can be significant. Volunteer Canada highly recommends that all member organizations consider carrying Directors’ and Officers’ Liability Insurance.
What are the Legal Risks of being a Volunteer Board Member?
The basic responsibility of directors is to represent the organization’s interests, their members and their constituencies in directing the affairs of the organization, and to do so within the law. In their role as “trustee,” directors have three basic duties:
- DILIGENCE to act reasonably, prudently, in good faith and with a view to the best interests of the organization and its members;
- LOYALTY to place the interests of the organization first and to not use one’s position as a director to further private interests; and
- OBEDIENCE to act within the scope of the governing policies of the organization and within the scope of the other laws, rules and regulations that apply to the organization.
A volunteer director who fails to fulfil his or her duties as outlined above may be found liable and may be held personally responsible for financially compensating someone for damage or loss arising from their failure to meet a pre-determined legal standard.
Directors and officers may be held personally liable for claims arising from:
- Activities of volunteers and/or staff in the name of the organization
- Employee discrimination
- Wrongful dismissal
- Breach of duties as described above
Claims may be made by:
- Government bodies
- General public
Non-profit and charitable organizations and their volunteers serve a vital role in our community. In addition to providing access to the most comprehensive, cost-effective Directors’ and Officers’ Liability Insurance available in the sector, Volunteer Canada is committed to empowering members with risk management tools to protect themselves pro-actively.