Where’s Cousin Vinnie when we need him?
Just trying to do the right thing is never in itself a good defense against accusations of wrongdoing, either in the court of public opinion, a court of law or an insurance claim.
During the Nonprofit Risk Management Center 2016 Risk Summit, attorneys John Ergastolo and David Madara of the nonprofit practice of Arthur J. Gallagher & Co., said that many nonprofits are purchasing or fortifying their directors and officers (D&O) liability insurance because, even though many states have laws to protect the members of an organization from liability, there is no perfect protection.
Thus it is important that organizations be aware of just what is covered by a D&O policy and how complaints and charges are handled. This includes knowing who is covered and in what circumstances, including the source of the claim. They cited the following trends in legal and insurance claims against nonprofits:
- Fiduciary claims are on the rise, particularly for larger employers;
- Wage and hour claims are not abating, particularly in California;
- Single plaintiff employment practices liability (EPL) claims are becoming more severe;
- Regulatory scrutiny has increased;
- Excessive compensation matters;
- Not for profit tax status challenges are on the rise.; and,
- Contract claims are increasing.