Yanche wrote:I got a million dollar "umbrella" policy when I was on the board of directors of several charitable and community associations. A local group of pro land development advocates didn't like our support of restrictive growth policies. They threatened to sue the organization and each member individually. Fortunately there were several corporate lawyers on the BoD that knew a bit more about the law and put the threats in perspective. I've kept my "umbrella" policy. It's cheap and gives me a sense of security, perhaps falsely.
As the old saying goes, "No good deed goes unpunished."
Recently finished a long bankruptcy litigation in which many trustees got sued even though it was a not-for-profit hospital whose board they served on. And that was in spite of state statutes which purported to shield the volunteer directors. But because there was a $20M "D&O" liability policy, there "must have been some liability," right?
It was even wackier than most litigation because it was Bankruptcy Court (which can be like finding yourself down the rabbit hole), but the moral of the story is simple: nobody should ever agree to serve on ANY board of directors without both "Directors and Officers Liability" insurance and an indemnity agreement from the organization against all defense costs. Because the first thing the D&O carrier typically does is to deny coverage based on some claimed misrepresentation in the policy application. And the carrier will never pay for the cost of that "coverage" litigation.
It got so bad that, toward the end of the case, we all were wondering why one would even bother buying D&O cover, because (a) it's a magnet for litigation, and (b) the carrier always wants to deny coverage anyway. But one need only look above to see the worries that can result from not having enough insurance.
So, like with so many things in life, we're damned if we do and damned if we don't. :banghead: