For nonprofit owners who head up a historical society or property in town, Directors and Officers Insurance (D&O) can save your endeavor from financial ruin if it is ever put in the middle of a claim related to the misuse of company funds among other issues. The nonprofit society behind the ownership of the historical property is in charge of purchasing historic insurance coverage, including D&O insurance. Without this kind of safety precaution in place, directors, officers, and board members within a historical society, for instance, could be held personally responsible in a lawsuit.
Having historic insurance, such as D&O insurance that’s specifically designed for those in the historical landscape, gives incentive to perform duties without the pressure or worry of personal liability.
Being in charge of a historic property can be inherently risky as the public has a certain way of being unforgiving in pursuit of legal matters. That’s why many nonprofits or historical societies opt for D&O insurance coverage in order to allow their professionals or those in charge of running the property to lead on without fear of financial loss. Directors’ and officers’ involvement in the day-to-day activities of a historic property may be second place compared to the many other responsibilities that they face on a daily basis. However, if anything comes up in terms of legal matters or liabilities, the blame drops on the director, officers, or board members involved.
Misuse of Funds
D&O historic insurance protects against claims that a director or an officer, or more, misused the organization’s funds. Unfortunately, only one allegation, no matter how small it is, is all it takes for a lawsuit to start. Even if liability is not given to a director or officer, the cost of hiring a lawyer can be enough to put a strain on your finances.
Additional Liabilities and Complaints
If a historic property’s employees claim a director is responsible for harassment or discrimination of any kind, the D&O insurance that’s in place can cover court costs that come with it. Also, if a director or officer failed to perform official duties to their utmost ability, a lawsuit can be leveled against them and their business as a whole. Historic insurance such as D&O insurance would cover a claim like this.
One goal for the owner of a historic property is to keep that property maintained and in place for years to come. Without D&O insurance, however, potential talent may feel their personal finances would be vulnerable if they accepted a role within the business. In the event your society or nonprofit is found liable in a claim, but the funds are not there for defense, your directors and officers will have to cover the costs.
Also, it’s important to note that criminal acts are not covered by D&O insurance. While this kind of coverage can protect directors from financial ruin in some cases, it will not protect them if they are found to be guilty of intentional acts, including fraud, or illegal profits. What this coverage extends to is “wrongful acts” as defined by the policy.