Understanding what the need is for Directors and Officers
(D&O) coverage is the first step, but do you know who could bring a claim
against the board of directors? Below is a list of potential plaintiffs and the
claims they could file that could be covered under a D&O policy.
DONORS – Claims
resulting from those who make donations to the organization
Ø
The Board of Directors of a church was sued by a
number of their donors, alleging misrepresentation of the financial status of the
organization. Three members brought separate suits for repayment of the money
lent to the church. The first case settled for $240,000 of which $117,000
accounted for expense. The second case settled for $75,000 and incurred $86,000
in defense costs. The last case paid nothing to the claimant, but incurred
$13,000 in defense costs. The total loss including defense costs exceeded $530,000.
THIRD PARTIES – Third
Party Lawsuits can be filed for various reasons
Ø
An organization filed a suit against a
foundation and its Board of Directors for improperly infringing upon the
claimants intellectual property rights. The claimant filed suit seeking
injunctive and monetary relief for the Foundation’s alleged improper use of trademarked
property while promoting their fundraiser. The claim settled and the total loss
including defense was over $400,000.
EMPLOYEES – The
most common claims made by employees involve Discrimination, Harassment,
Wrongful Termination, Retaliation and Hostile Work Environment
DISCRIMINATION
·
After 10 years of employment, an employee was
fired for poor work performance. This employee brought a discrimination suit
against their employer under the Americans with Disabilities Act (ADA). The
individual alleged lack of work place accommodation and constructive discharge.
The claim was closed for a total loss of over $80,000, including more than $20,000
in defense costs.
SEXUAL HARASSMENT
·
An employee alleged one of the directors
sexually harassed her by unwanted physical contact, which occurred multiple
times. After mediation, the case settled for $30,000. The defense costs
exceeded $20,000.
RETALIATION
·
A former employee discovered illegal
transactions involving retirement funds. Shortly after reporting the
violations, she was terminated by her employer. She filed suit alleging
retaliation and wrongful termination. The total loss exceeded $100,000 with the
settlement figure over $80,000.
GOVERNMENTAL AGENCIES
– Claims due to the violations of law
Ø
The United States Department of Justice brought
suit, alleging misappropriation of funds and failure to revert unused money
back to the government. The insured received federal grant money and allegedly
used leftover grant money to renovate office space instead of return it to the
government. The case closed for a total loss of over $60,000, including $21,000
for defense costs.
VOLUNTEERS – Volunteers are able to
bring suits similar to those made by employees
Ø
A volunteer claimed the denial of a full time
position was due to her sex, race and pregnant condition. She filed a lawsuit
claiming discrimination. The claim is pending further litigation and defense
costs paid to date total over $10,000 with an outstanding loss reserve of
$65,000.
MEMBERS – A claim against the Directors
to protect their members’ interests
Ø
A law enforcement fraternity began proceedings
to have a member removed from the organization. This member then sued the
organization in order to have the proceedings halted. While there was no
monetary settlement, the defense costs were $15,000.
BENEFICIARIES – A claim made by the
recipient of the organizations’ services
Ø
A discrimination suit was filed against the
Board of Directors when the claimant requested a transfer within the housing
complex and was denied. The claimant alleged discrimination based on national
origin, religion and sex. The claimant was a resident at a drug and alcohol
rehabilitation center. The court dismissed the case due to a lack of evidence.
More then $10,000 was paid in defense costs.
Get an instant quote for your upcoming nonprofit D&O
account by providing the below information or give us a call at 877-977-4474.
- Name of the Applicant
- Physical Address
- Description of Operations
- Total Annual Revenues
- Number of Full Time and Part Time employees and Volunteers
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