Write short notes on the following: (iv) D & O Insurance for Non-Profit Organisations.

D & O Insurance for Non-Profit Organisations Large numbers of directors and officers for non-profit organizations lack experience. Often times, they also lack sufficient knowledge of their legal duties and responsibilities regarding the non-profit they serve. Directors and officers of non-profit organizations who do have knowledge or experience sometimes take advantage of the less formal approach of non-profits and fail to take the same business approaches to decision-making as they would when working for a for-profit corporation. It is critical for non-profit board directors and officers of all types and sizes of non-profit organizations to understand that not all of their actions are fully protected by the law. Non-profit boards that fail to protect their organizations with a D&O insurance policy, may find that the cost of just one claim is far larger than the cost of any insurance premiums they would have paid, if they had purchased a D&O insurance policy. D&O insurance will not prevent claims from occurring; however, it does mitigate the high costs associated with defending claims. Lawsuits and potential claims may originate with vendors, donors, competitors, employees, government regulators or others. According to Massnonprofit.org, D&O insurance protects against, "Any actual or alleged act or omission, error, misstatement, misleading statement, neglect or breach of duty by an insured person in the discharge of his/her duties." It also covers personnel issues, including discrimination, wrongful termination, harassment, failure to provide services and mismanaging assets. D&O insurance policies are common and necessary to cover the actions and decisions of board directors and officers. D&O insurance policies offer coverage for defence costs, settlements, judgments arising from lawsuits and wrongful allegations brought against the non-profit organisations. The cost of D&O insurance policies is determined by many factors, including the potential degree of risk and the size of the non-profit organisation. Boards may also reduce some of the costs of the policy by working with insurance companies to mitigate certain risks. Boards that have clearly written policies for hiring, firing and other issues will be viewed as less risky by insurance companies. Lower risk factors typically equate to lower insurance premiums. Board directors should take care to understand their D&O insurance policies. Specifically, they need to be familiar with policy wording for directors and officers, as well as any additions, conditions and exclusions listed within the policy wording. Non-profits organisations may consider inviting an insurance professional to make a presentation to the board on D&O insurance as part of board development. In summary, regardless of the organization's size and board experience, all non-profit organizations need to purchase D&O insurance protection. In addition to a D&O insurance policy, all non-profit boards should develop an effective risk management plan to protect individual directors, protect the organization and prevent claims against the D&O insurance policy.