How does an individual protect himself or herself from the liability of serving on a nonprofit board?
One common source of protection available in most states is the personal liability protection umbrella, which can be purchased as part of a homeowner’s insurance policy. Under such policies, trustees/directors who are not compensated often automatically receive at least some coverage for liability incurred during “volunteer activities.” Coverage under homeowners policies should be carefully scrutinized. In general, homeowners policies 1) tend to focus on bodily injury, property damage, and (depending on the policy) personal injury—they often do not provide protection for employment practices suits or organization mismanagement suits, and 2) they tend to focus on “negligent” acts—and they may not offer coverage for deliberate board actions. As the Los Angeles County Bar Association notes: “Personal umbrellas have an exclusion for Directors & Officers (D&O) liability. The policy is personal, and D&O exposures for financial type claims, including breach of fiduciary responsibility, are no
