Directors and officers of a nonprofit organization can be held personally liable for the decisions they make. Being a nonprofit does not mean that the decisions of the board are immune from public scrutiny.

Donors, employees, recipients of service, vendors, competitors, and even the government may bring an action against an organization and its board. A corporate shield and broad by-laws offer board members and employees some protection. Unfortunately, in many cases, such protections may not be adequate. Typical lawsuits against directors and officers include allegations of:

• Mismanagement of operations or organization assets.
• Self-dealing and conflicts of interest.
• Acts beyond authority granted in by-laws.
• Violation of certain state and federal laws.
• Breach of fiduciary duties.

Litigation can last years and become a financial burden on a nonprofit organization. If an organization cannot indemnify its directors, officers, or employees, either because of the allegations of a lawsuit or as a result of the organization’s insolvency, then this financial burden can become the personal responsibility of the organization’s directors, officers, or employees.

The Maryland Nonprofits Directors and Officers (D&O) Liability Insurance Program features insurance provided by the Chubb Group of Insurance Companies and is being sold through Gorges & Company, Incorporated. Coverage is only available to nonprofit members of Maryland Nonprofits.

The plan has been carefully reviewed to assure that it contains the best features available in the D&O market. Special features include:

• Coverage for Staff, Volunteers, and Committee Members:  Many D&O liability insurance policies only provide coverage for the directors and officers. But, the Maryland Nonprofits D&O Program also provides coverage for all employees, volunteers, and committee members working for your organization.
• Coverage for Your Organization:  Many D&O liability insurance policies only provide coverage for individual people and don't provide any coverage for your organization. The Maryland Nonprofits D&O Program also provides Association Coverage ("entity" coverage) to protect your organization. Coverage is provided for claims brought against your organization. This coverage may not be available under your general liability policy or under a traditional D&O policy. 
• Coverage for Employment Practices:  Many D&O liability insurance policies provide no coverage for employment discrimination, wrongful termination or other claims involving your employment practices. Yet, these are the subjects most likely raised in suits against your organization and board. The Maryland Nonprofits D&O Program specifically covers employment practices. 
• Compatibility with Maryland's Charitable Immunity and Volunteer Immunity Laws:  The Maryland Nonprofits D&O Program is designed to dovetail with, and is priced to reflect, the immunity from liability which is available under Maryland law to nonprofit organizations, their board members, staff and volunteers.  At Maryland Nonprofits, we continually monitor laws and court decisions in this area and will inform Chubb of changes needed to assure that this policy is consistent with those laws.

Chubb’s  nonprofit D&O liability insurance policy is issued on an admitted basis in Maryland. Many other D&O policies are written as surplus lines insurance by "non-licensed companies," or by "risk retention groups," and are not subject to the same level of regulatory scrutiny. Policies issued by unauthorized companies or risk retention groups are not protected by the Property and Casualty Guarantee Corporation.