If you are a non-profit, you are likely to have your General Liability Insurance in place. You may have also Directors and Officers (D&O) insurance as well as other insurance, and you think that you’re covered. Right? Not so fast. It is possible that you need Professional Liability (E&O) Insurance as well.
Many nonprofits erroneously assume that their D&O policy covers “errors and omissions” (E&O) or malpractice. This is not necessarily the case. D&O insurance is designed to protect personnel from claims that arise due to actions they have taken within the scope of their duties as officers, directors, or company individuals. Professional Liability insurance, on the other hand applies to errors and omissions while performing the service that is part of your organization. In a world where lawsuits are common, damages may run up to hundreds of thousands of dollars.
Who Needs Professional Liability (E&O) Insurance?
Nonprofit organizations in health care, human services, or any field that provides counseling or other professional services are especially vulnerable to risk and should consider E&O insurance. According to Pamela Davis, President and CEO of the Nonprofits Insurance Alliance Group and a passionate advocate for nonprofits and their insurance needs, 90% of claims are due to “accidents and injuries related to automobiles or slips, trips and falls at nonprofit locations and special events.” However, these 90% of claims result in only 65% of the dollars paid out. The 10% of claims resulting from allegations of improper employment practices, professional errors and omissions, and sexual abuse account for 35% of claims dollars paid. Davis goes to explain why nonprofit organizations are especially at risk: “we work so intensively with clients and provide services to some of the most vulnerable and the most troubled in our communities.”
The definition of “professional” has expanded over the past several years, including such things as counseling, vocational training, and other kinds of instruction, in addition to “doctors and lawyers.”
D&O vs. E&O
Whereas D&O covers the performance related to the duties of the directors and officers, E&O insurance covers failures or negligence with respect to service to customers. D&O also protects against wrongful acts regarding employment practice and securities. Professional services under E&O include services performed for, or advice given to, others on behalf of the organization. E&O extends to professional supervision, provision of computer and internet services, and any other administrative services and publications considered to be performed for the users, clients, or customers of the organization.
In a world where lawsuits are common, appropriate insurance coverage is a necessity. Every organization’s insurance needs are a little different. We encourage you to work with a Rollins representative to help sort through your risks and provide an insurance solution designed to protect you. Call us.