Directors' and Officers' Liability

The trustees directors and officers at museums and historical societies are often surprised to learn that they are vulnerable to mismanagement lawsuits brought by their employees, donors and patrons.  These types of lawsuits are expensive to defend, and can result in serious financial loss and damage to your reputation in the community.

HTB’s Directors' & Officers' (D&O) Liability Insurance helps protect you against a wide variety of lawsuits alleging your management’s decisions and actions resulted in adverse financial consequences.

Product Overview

• Sample Allegations
• Covered Parties
• Unique Coverage
• Employee Lawsuits
• Premium Discounts
• Additional Features

What are some examples of allegations of mismanagement?

 

Nonprofits boards are responsible to their organization’s constituencies similar to the duty owed by corporate boards to their shareholders.  Allegations of mismanagement may be brought by employees, donors, patrons, board members, vendors, other institutions and governmental agencies. 
 
Typical allegations include:

• Unfair employee practices
• Inefficient administration
• Violations of bylaws
• Conflicts of interest
• Improper self-dealing
• False or misleading reports
• Continual absence from meetings
• Failure to file annual report
• Mismanagement of an organization’s assets
• Failure to detect embezzlement of funds

 

 

 

Who is covered under your D&O policy?
 
The policy provides coverage to any past, present, or future director, officer, trustee, employee, volunteer or committee member.  As lawsuits typically name the organization as a defendant, coverage includes the organization entity.
 

Are all D&O policies the same?
 
They are not.  The coverage provided by a D&O policy can vary depending on the industry.  For instance, the D&O policy written through HTB includes the following unique coverage designed specifically for museums:

• Provenance Liability:  Provides a legal defense if the museum is faced with a lawsuit challenging the ownership records to a work of art.  This coverage provides a $100,000 sublimit for defense costs of provenance claims.  A higher $250,000 sublimit is available (subject to underwriting).

For this reason, it is important to secure coverage through a specialist that can offer D&O coverage customized for art institutions.

Does your D&O policy include protection for employee-generated lawsuits?
 

Our D&O for museums includes Employment Practices Liability at no additional charge.  This important coverage helps protect your board members from a number of employee-related lawsuits, such as:

• Discrimination
• Sexual harassment
• Wrongful termination
• Failure to hire
• Retaliation
• Failure to promote
• Deprivation of career opportunity
• Negligent evaluation

Are there any premium discounts available?
 

 
American Alliance of Museum (AAM) members are eligible for a 10% premium credit on their D&O policy through HTB.

 

Additional Program Features
 

• Liability limits available up to $10 million
• Unlimited legal defense costs
• Publisher’s Liability Coverage
• Coverage for Federal Fines & Penalties
• $100,000 Fiduciary Liability (ERISA) Sublimit
• Wage and Hour Law Claim Defense Costs
• Outside Directorship Liability
• Third Party Breach of Contract Claims
• Excess Benefit Transaction Penalties