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Why Churches and Schools Must Ensure They Have Directors and Officers Insurance Coverage
It’s important to understand that any time an organization is established – whether this is a traditional “for-profit” corporation, or a nonprofit or community organization such as a church or school – then certain procedures must be followed in order to provide safeguards. We live in a very litigious society and regulations exist at all levels of government in order to safeguard both organizations and the consumers they come into contact with.
We are seeing an increasing number of cases where churches or schools are being challenged in court, notwithstanding that most people would consider these institutions to be “less commercial” than other types of organizations frequently seen in litigation. Bigger institutions seem to be attracting more attention, with one study estimating that as many as 7% of churches with an attendance greater than 1000 are likely to face some kind of case in court.
Many of these organizations may have addressed their business insurance needs in the past, but have they considered specific coverage, such as directors and officers insurance? While many people who occupy these roles do so for little or no compensation, the fact stands that they may be challenged in a court of law. Courts have been shown to find officers and directors personally liable and it should not be assumed that any of these institutions have some kind of immunity.
Directors and officers could be found to be negligent when it comes to supervision of workers, wrongful termination, lack of fiduciary care, engagement in fraudulent activities or failing to comply with federal and state regulations. While there may be protection in place to limit liability in the case of a director or officer who does not receive compensation, the limitation does not extend to cases where intentional misconduct or gross negligence are involved.
When key individuals are engaged in their duties it’s important to have directors and officers insurance coverage as part of an overall raft of business insurance products for churches or schools. Shepard Walton King can advise your organization about the quality of your existing coverage and provide protection when needed.
Do you feel that your church or school is adequately covered in today’s litigious world?