Why Coverage is Necessary

  • A hobby club dismissed a member from the organization for bullying and verbally abusing other members during card games. The dismissed member brought suit against the board of directors, alleging failure to adhere to the by-laws and misappropriation of club funds throughout the course of his membership. In discovery, financial improprieties were found which led to additional suits being brought. The total loss was in excess of $750,000 with almost $200,000 in defense costs alone.
  • A longtime church member serves on the board of directors for a two-year term. Eighteen months after her term ended, a lawsuit was brought alleging that she mismanaged church funds during her service, seeking the return of $200.000. As the board that followed her decided to cancel their directors and officers coverage, she had to defend herself at her own expense and had to take out a second mortgage on her home after incurring $37,000 in defense costs and settling for $50,000.
  • A country club golf professional sued the club’s governing board, alleging that they failed to supervise her general manager, who had sexually harassed her repeatedly over a nine-month period. While the board was made aware of the issue, they didn’t have proof, and, therefore, decided not to take any action. A settlement was reached for $300,000 after incurring almost $60,000 in defense costs and negotiation expenses.

This information does not amend, extend or alter the coverage afforded by the policy. For a complete understanding of any insurance you purchase, you must first read your policy, declarations page and any endorsements and discuss them with your agent. A sample policy is available from your agent. Your actual policy conditions may be amended by endorsement or affected by state laws.

Eligible Risks:

Nonprofit organizations with up to 500 employees across a broad range of classes, including:

  • Professional and trade associations
  • Fraternal clubs, hobby clubs and membership groups
  • Social service agencies
  • Charity groups and fundraising groups
  • Foundations
  • Private schools and educational-related organizations
  • Country clubs, tennis clubs, golf clubs and swim clubs

Most Common Ineligible Risk Characteristics:

  • Activist groups
  • Bar associations
  • Charter schools

Churches and other nonprofit organizations just like yours are facing unprecedented challenges in achieving their mission. Changing laws, increased government oversight, employee related issues and competition for staffing and funds are just a few of the daily hurdles church leaders must overcome.

Administrative councils and board claims can easily reach in excess of $100,000, and employment-related claims are being filed more frequently than ever before. Tight operating budgets most churches could not sustain their operations in the vent of such claim.

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