Most of us like to help out whenever and wherever we can. Occasionally we’re asked to sit on a fundraising committee for a particular charitable cause or perhaps we’re tapped on the shoulder by a friend involved in a not-for-profit group. Maybe you sit on your condominium board or perhaps you help run the local festival. Often we say yes to these requests with our only concern being how are we going to fit yet another meeting into our busy calendar.
Ottawa - January 14, 2013 - Most of us like to help out whenever and wherever we can. Occasionally we’re asked to sit on a fundraising committee for a particular charitable cause or perhaps we’re tapped on the shoulder by a friend involved in a not-for-profit group. Maybe you sit on your condominium board or perhaps you help run the local festival. Often we say yes to these requests with our only concern being how are we going to fit yet another meeting into our busy calendar. But did you know that by saying ‘yes’, you’ve opened up your personal wealth to potential risk?
Enter Bill 198. Bill 198, along with a whole list of other provincial and federal government regulations went into effect after some spectacular corporate scandals hit the news back in the 1990’s. These regulations have tightened the reigns on what is and isn’t allowed when it comes to not-for-profit groups which handle other people’s money. The risk exposure for those who serve with these organizations is great because if money is mishandled or a lawsuit results in damages to be paid out, your personal wealth could be on the line if you aren’t protected by the correct insurance product, even if you weren’t directly involved in the allegation.
Director’s and Officer’s insurance (or D and O as it is widely referred to) is designed specifically to address the unique risk factors that face those who serve with not-for-profit organizations (D and O also covers private for-profit companies but that isn’t our focus today). In broad terms, it protects you and your fellow members if you inadvertently do something that you shouldn’t have done or if you didn’t do something that you should’ve done. Allegations of wrong-doing surrounding membership disputes, defamation of character issues, misuse of funds and even discrimination allegations against members of not-for-profits are not uncommon. Just watch the news for a few days and you’ll be amazed at the number of stories involving allegations against corporations and not-for-profit groups.
Once triggered, a D and O insurance policy will typically pay for your group’s cost of defence along with varying levels of damages, up to the limit of the policy purchased. The fine print in these policies is important to understand as some will provide defence costs on top of your policy’s limit while some other policies will not. With defence costs soaring, it’s important to keep that in mind and choose your limits wisely.
So the next time that you are asked to “help out”, do some checking first to see if the organization has D and O insurance in place and what it all covers. And if the group doesn’t have a policy or is unsure of what it includes, contact me and I’ll work with them to secure the proper coverage.
Presented here is a general article about insurance. The discussion is general in nature, and does not constitute insurance advice. This is not intended to be a description of coverage, and does not include details of the coverage nor the terms, conditions, qualifications, limitations and exclusions applicable. Policies should be reviewed in their entirety and related to your specific operations. Many insurers permit changes (Changes to insurance policies are usually called "endorsements" or "riders") in their limitations or exclusions to match your specific requirements. As insurance advice must be tailored to the specific circumstances of each situation, nothing provided herein should be used as a substitute for the advice of a competent insurance broker. IN NO EVENT WILL RHODES & WILLIAMS LIMITED BE LIABLE FOR ANY DAMAGES WHATSOEVER, INCLUDING SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES, ARISING OUT OF OR IN CONNECTION WITH THE USE OR PERFORMANCE OF THE INFORMATION PRESENTED IN THIS DOCUMENT.
Lorne Wiebe is a well known former Cornwall broadcaster. Even though he now calls Ottawa his home, he has a special affinity for Cornwall and SD and G. He now works at Rhodes & Williams Insurance Ltd. and partners with the local business community to help them deal with their day to day risks. If you have questions or wish to contact Lorne, you can email him at Lornew@rhodeswilliams.com
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