While most charities and non-profits are immune from various types of liability under Maryland law, there are still several reasons to carry this critical coverage for your organization.  Court decisions and statutes provide some limited protection.  However, employees, volunteers and board members all present exposures necessitating the need for a sound D & O (directors and officers) insurance policy.

    Just because 501c-3s have certain immunity from liability doesn’t mean that someone or some organization can’t sue.  The average defense costs for directors, officers, volunteers and employees is approximately $150,000/case.  So unless your organization plans on paying out of pocket, the D & O policy will typically respond and include defense costs. 
    Maryland has some sound immunity laws, but they may not be enough to protect you and your organization from all potential liabilities.  Often times cases brought against nonprofit boards and/or staff are based on federal laws which may not be affected by the state’s immunity protection. 
    Most of the state laws providing immunity for your staff, board and volunteers will only apply if the organization has insurance   already in place.                         

    Many feel that a general liability policy will be enough.  This is not the case, especially with non-profits.  While a standard GL policy will protect the organization from claims of bodily injury or property damage, this policy is not designed to protect against any fiduciary wrongs that may be incurred due to the board’s actions.   Often a D & O policy will include a separate limit for employment practices liability as well (see our previous blog from 6/8/11).

 Still have questions?  Interested in obtaining a no-hassle quote?  Call or email McFarlin Insurance Agency today!