Do you serve on a board of directors? As a way to "give back", many people serve on a board of directors, and perhaps more than one. While this is a wonderful way to serve your community, it's important to know if there is coverage to protect and defend you for the decisions you're making as a board member. Often, the organization will purchase a Director's and Officers policy for this very reason. So it's always a good idea to ask if the organization has a Director's and Officers policy in place (called D & O for short).
Whether or not this policy is in place, many people will also look to their own insurance company for protection, often through a personal umbrella policy. Many mistakenly assume there IS coverage under the personal umbrella policy, and that may not necessarily be true. The point here it is to get rid of assumptions and prompt you to ask questions of your own insurance agent.
As a general rule, you MAY have coverage for your time spent on the Board of Directors, but it often relies on what type of organization it is (for-profit vs. non-profit for example) and whether or not you're paid for your time. Listed below are personal umbrella exclusions lifted directly from our carriers' personal umbrella policies. This gives you several good examples of what real-life personal umbrella insurance policies offer in terms of coverage.
Sample exclusions from personal umbrella insurance for board of directors coverage:
Any act or omission of anyone we protect as an officer or member of the board of directors of any corporation or other organization, except non-profit corporations or organizations.
So in this example, it appears if the organization is non-profit, you would have some coverage. You ALWAYS want to consult your insurance agent as it relates to YOUR policy. But, this shows you real language that is being used and will hopefully be the spark for you to have that conversation.
Personal injury or property damage arising from any act or omission of the insured as an officer or member of the board of directors of any corporation or other organization. This exclusion does not apply to a non-profit corporation or organization for which such officer or member does not receive a salary.
Here it looks like the non-profit organization is also a requirement, BUT you can't receive money for your time. Many organizations pay their board members, typically per meeting.
"Bodily injury", "property damage", or personal injury" resulting from an "insured's" service as an officer or member of a board of directors. However, this exclusion does not apply to "bodily injury", "property damage", or "personal injury" resulting from an "insured's" service as an officer or member of a board of directors for a not for profit organization for which the "insured" is not compensated.
Similar to Exclusion #2, non-profit is a requirement for coverage to apply AND also the board member must not receive any compensation.
So, Does Personal Umbrella Insurance Provide Board of Director Coverage?
The answer is your favorite- MAYBE. Judging by these examples, chances are good if the organization is a) non-profit and b) you are not paid for being a board member. Any combination of these could make you ineligible for coverage.
The point here is to eliminate dangerous assumptions, and prompt a conversation with your insurance agent or company. We don't like nasty surprises and I'm sure you don't either!
Looking for more information about personal umbrella insurance? Please check out these additional articles:
If you're looking for an agent that believes in listening to your situation, offering time-tested recommendations and educating you so you can make good decisions, contact Alan Galvez Insurance today. You can reach us at (937) 592-4871 or complete our contact form on our website. You can also submit your personal umbrella insurance quote immediately.