Members of a board of directors face challenges on a daily basis. They can sometimes also come under fire if there are allegations these individuals acted in ways that caused harm to the organization. Lawsuits can result even if the actions were not meant to cause intentional damage. Due to these risks, directors insurance can be a helpful advantage to extend when recruiting new members to a board.
Defending Even Frivolous Lawsuits Can Cost Thousands
You may be associated with an organization that seems unlikely to ever get wrapped up in a major lawsuit. However, legal troubles that are connected to minor things can cost thousands of dollars or more to defend.
If an organization is not in a financial position to support its board members during potential legal disputes, specialty insurance provides much-needed protection from a financial burden.
It Demonstrates a Proactive Approach
Directors insurance can also be an appealing perk for a possible board member because it shows the organization as a whole cares about planning for the future and being prepared to firmly answer the “what if” questions that often spring up. An organization may have never faced litigation before, but that doesn’t guarantee future immunity.
These are two reasons why directors insurance is advantageous to offer when urging new people to join a board of directors, especially if the goal is to make them feel confident about deciding to accept.