Do Non-Profits Need Directors Insurance In Canada?
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While your business may be founded on supporting a social cause, generating goodwill and benefiting society, it still faces risk. Whether it is a non-profit, a charity or a not-for-profit, it is important to consider “Do non-profits need directors insurance in Canada?” when it comes to building your board of directors. Just like any other entity, non-profits do indeed require directors insurance. In fact, according to IBC, “Organizations with paid or volunteer boards should be aware that directors and officers have very specific duties and obligations. Directors and officers should be given all of the appropriate information that is required to perform their duties effectively.”1 There’s a lot to consider when addressing the question “Do non-profits need directors insurance in Canada?” and we’ve broken down some of the key things you need to know below.
3 Reasons Why Non-Profits Need Directors Insurance In Canada
- Conflicts of interest. Directors who are employed elsewhere or own a business might find that their “day” jobs conflict with their “volunteer” organization’s best interests. Directors are privy to confidential and sensitive information and responsible for maintaining privacy. Officers make public statements on behalf of their organizations that need to be appropriately timed and contain appropriate content. Officers should not accept services, gifts or favours that relate to their duties.
- Operating policies and procedures. Each one of your board members should have a deep and thorough understanding of your organization’s operations, guidelines and standards. This includes financials (reporting & related policies) as well as privacy and confidentiality of information and materials. Any real or perceived misunderstanding could have a significant impact on your organization’s bottom line.
- Human Resources. Just as your charity, not-for-profit or non-profit has guidelines, standards, policies and procedures for paid employees, your volunteers should also be aware of what constitutes unacceptable volunteer performance. Formal job descriptions and documentation of required experience, education and training can help you ensure your directors are well-prepared for their role and associated responsibilities.2
Related Matters: IBC.ca 11 Risk Management Opportunities for Directors & Officers
Non-Profits Need Directors Insurance In Canada – 3 Ways D&O Coverage Can Help
Also commonly referred to as D&O insurance, directors and officers insurance is a must for non-profits – here’s why:
- Looking to attract top talent? Professionals want to be protected from day one. If you are looking for individuals with the ICD professional designation from the Institute of Corporate Directors they’ll expect you have comprehensive non-profits directors insurance in place.
- Worried about stakeholders? Bumps in the road happen. As a not-for-profit, charity or non-profit, your stakeholder group is diverse and your activities are wide-ranging. Should stakeholders bring suit against your directors &/or officers alleging breach of duty, your non-profits directors insurance will be in place to respond.
- Legal expenses. If an allegation triggers the wrongful act and claim definitions, your non-profit directors insurance will respond and cover legal expenses of your board members and employees.
Our expert team of business insurance brokers at ALIGNED Insurance can help you and/or your board answer the question “Do Non-Profits Need Directors Insurance In Canada?” as well as provide specific guidance on what your non-profit, charity or not-for-profit organization needs to ensure its directors and officers are well-protected.
To Discuss Do Non-Profits Need Directors Insurance In Canada? Further Or For A Non-Profits Directors Insurance Quote Connect With One Of Our Canadian Business Insurance Brokers Today at 1-866-287-0448
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