D&O Liability vs. General Liability

Boardroom meeting

Two critical insurance coverage’s for any nonprofit are General Liability Insurance and Directors & Officers Liability Insurance.  They both provide very different yet critical coverage for your nonprofit.  The key differences are:

Directors & Officers Liability Insurance (often called D&O) provides coverage for “intentional” acts.  This coverage is for defense costs & damages arising out of a wrongful or intentional act allegation and/or lawsuit brought against an organization’s board of directors and/or officers. Nonprofits may not realize that their board members could be held personally liable for the actions of the organization.

Common areas of dispute revolve around discrimination, sexual harassment, wrongful termination, negligence, failure to provide services, intellectual property rights infringement, mismanagement of assets, and misrepresentation of the financial status of the organization, just to name a few.

General Liability Insurance provides coverage for “negligent” acts. “Negligence” is defined as a failure to take proper care in doing something or failure to use reasonable care, resulting in damage or injury to others.  So, if your organization or it’s employees or even your volunteers (including your board members!) are negligent and have caused someone “bodily or personal injury or property damage”, you usually can rely on general liability insurance for coverage.

Many of these claims can be minimized by having good risk management practices & procedures in place.