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Directors and Officers Insurance for PTAs

Thursday, December 22, 2022 D&O insurance

Parent-teacher associations (PTAs) aim to help members of an educational community work together to improve conditions and learning experiences for students, families and employees. However, as PTAs compose goals, implement plans and make changes, mistakes or oversights could lead to significant losses and damages. With that in mind, it’s necessary for your PTA to understand the benefits of Directors and Officers (D&O) Insurance and acquire adequate coverage. 

What Is Directors and Officers Insurance? 
As its name suggests, a D&O policy’s general purpose is to protect an organization’s leaders if they are the target of a lawsuit accusing them of causing financial losses. By purchasing coverage and maintaining it via regular premium payments, your PTA may be able to access crucial financial resources in the wake of such allegations. 

What Does Directors and Officers Insurance Cover? 
Lawsuits targeting leaders of an organization, such as a PTA, may arise from many alleged incidents. Common examples may include the following: 

  • Misuse of funds
  • Fraud
  • Breach of fiduciary duty
  • Mismanagement
  • Theft of intellectual property
  • Reporting errors 

The aforementioned allegations could affect an organization as a whole and an individual leader’s personal finances and assets. Your D&O policy may be able to provide financial assistance for various legal costs, such as the following: 

  • Representation
  • Judgments
  • Settlements 

Why Does a PTA Need Directors and Officers Insurance? 
Although PTAs may not have a large corporation’s profits or significant financial assets, your board members may still face frequent risks and exposures that could lead to lawsuits. Furthermore, nonprofit organizations and their leaders may lack the out-of-pocket resources needed to manage the losses and costs that could result from such allegations. 

Even board members with the best intentions may not always make the right decisions. Regardless of intent, even a single mistake or misjudgment could have irreparable financial ramifications if the target of a lawsuit lacks proper D&O protection. 

In general, PTA members likely choose to participate out of community service rather than for personal gain. However, if your organization lacks the insurance to protect its leaders, certain qualified candidates may be hesitant to put themselves at risk. As such, valuable innovation and ideas could be lost. 

Get the Right Coverage 
PTAs generally exist to provide a positive experience for school-based communities; however, any organization that makes financial or operational decisions bears certain levels of inherent risk. Furthermore, PTAs may regularly host events, hire vendors, deal with donors and make employment decisions, all of which could potentially lead to lawsuits that, without an adequate D&O policy, could have significant financial consequences. 

We’re here to help. At Bene-Marc, Inc., our qualified D&O experts will work with your PTA to ensure that your leaders have sufficient coverage and can improve their communities with minimal concern. Contact us today to get started. 

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