Not-for-Profit Individual and Organization Insurance
with Employment Practices Liability Coverage
The member companies of American International Group, Inc. (AIG) and
principally National Union Fire Insurance Company of Pittsburgh, Pa.®
(National Union) have made a commitment to protecting not-for-profit
organizations and the numerous individuals who serve them with Not-for-
Profit Protector ®, Individual and Organization Insurance with Employment
Practices Liability Insurance.
Not-for-Profit Protector articulates broad, strong D&O and employment
practices liability protection for not-for profit organizations, their past,
present and future directors, officers and trustees, as well as employees,
committee members, volunteers, staff and others. Generous coverage
provisions ensure everything from a broader definition of insured, to express
coverage for third-party discrimination claims, to the choice of a top law
firm to defend claims.
Over more than 30 years protecting not-for-profits and the individuals
serving them, National Union has seen what these organizations need and
want in D&O and employment practices liability protection. And we’ve
delivered it in one potent policy, backed by high financial strength ratings.
Not-for-Profit Protector Coverage
Insights spotlights how this policy
goes above and beyond other
available coverage to address the
critical D&O and EPL exposures
of not-for-profit s— contemplating
everything from covering the assets
of a director’s loved ones1, to non-
employment discrimination claims.
1 Coverage is provided for the wrongful acts of insured persons only.
Who is Covered
Risk: Certain organizational entities, especially newly acquired ones, and
individuals can be left at risk from claims if coverage does not specifically
contemplate their exposure, or the organization does not update coverage
in a timely fashion as its structure grows or changes. The consequences
of such an oversight can be substantial: A claim against one uninsured
entity can sap cash flow and disrupt the mission of the entire organiza-
tion. Moreover, individuals left without coverage may not only find their
own personal wealth at stake, but the assets of their spouse, domestic
partner or heirs may be exposed in litigation as well.
Built-in entity coverage helps safeguard
the organization’s cash flow.
Solution: Not-for-Profit Protector, by its terms, shields a broader
range of entities and individuals than any other coverage of its type
available today. Covered entities include the named organization and
any non-profit or for-profit subsidiaries that exist, at the policy’s
inception. Coverage automatically extends to all non-profit and for-
profit subsidiaries the named insured acquires during the policy period.2
Even affiliated organizations not controlled by the named insured
organization can be covered.3
Coverage also encompasses individuals operating on behalf of any
insured entity, including trustees, directors, officers, employees and
volunteers. The estates, heirs, spouses or domestic partners of insured
individuals are protected in claims arising from that individual’s service
to the organization. Coverage can even be expanded to include leased
employees and other key third parties, such as the wide range of
individuals serving healthcare organizations, academic institutions
and homeowners associations.
2 Depending on the asset size, the subsidiaries are either automatically covered for the balance of the policy, or they can be added for
an additional premium and/or change in terms subject to underwriting approval.
3 Such entities must be listed by endorsement in order to be covered.
Employment Practices Claims
Risk: Employment discrimination is the most frequent allegation
made against not-for-profit organizations and those who serve
them — and evolving legal theories continue to increase organiza-
tions’ vulnerability to these claims.
Even when discrimination is found to be unintentional,
an organization, its trustees, management and employees
can be left to pay a high price defending the allegations.
Solution: Not-for-Profit Protector offers exceptionally broad pro-
tection for employment-related claims, covering 12 named perils,
including wrongful termination, discrimination and harassment.
Third-Party Discrimination &
Risk: Not only employees, but volunteers, vendors, potential
beneficiaries of a non-profits’ services and other third parties
frequently sue not-for-profits alleging discriminatory practices or
harassment. In fact, many of the largest recent discrimination
verdicts and settlements have involved allegations by third parties.
If an insurer remains “silent,” not specifically addressing this risk
in its insurance contract, a not-for-profit could be left with a
potentially devastating hole in coverage.
Solution: Not-for-Profit Protector expressly covers discrimination
and harassment claims brought by non-employee third parties,
such as students, patients, volunteers or members.
Mitigating Discrimination and
Other Employment Claims
Risk: Organizations must do more than ever in order to avoid or mitigate
employment practices claims. Courts have made it essential, for example, that
organizations produce evidence of proper employee sensitivity training and
education programs in order to successfully defend certain discrimination
claims. Many not-for-profits, however, do not have ready access to the expert-
ise and resources to ensure these practices and instill proper procedures.
Additionally, the way an organization handles a brewing crisis can be
pivotal in keeping an employment issue from exploding into a severe
employment practices claim. Again, the expertise needed to manage
potential employment crises is often not present at most not-for-profits.
Solution: Every Not-for-Profit Protector insured receives EPL Pak Premier®,
a package of loss prevention products and services designed to help them
instill proper workplace training and practices—and document due diligence
in doing so.
EPL Pak Premier products and services, include:
• Initial consultation with leading labor and employment attorneys4
• HR Comply Employment Guide, an Internet-based human resource
compliance system, which allows access to research up-to-date state
and federal legislation in detail
• Title VII Plus, a Web-enabled training, testing and tracking program
designed to help sensitize employees to important issues under Title
VII of the Civil Rights Act of 1964 and other major federal discrimi-
• Access to employment practices seminars
• E-mail subscription to monthly EPL newsletter
In addition, Employment CrisisFund®, available by coverage endorsement, pro-
vides insureds with up to $50,0005 to hire a leading crisis management firm
that can provide counsel to help prevent or mitigate severe employment claims.
4 One-hour employment practices consultation via a toll-fee telephone number.
5 Amount of coverage varies and is a sub limit of the policy’s aggregate limit of liability.
Panel Counsel Versus Duty
to Defend Cover
Risk: If a not-for-profit liability policy is written on a “duty-to-
defend” basis, the insurer chooses the attorney that will defend
the insured in a claim. The insured has no input — and hence, no
control over the quality of its ultimate defense.
Solution: Not-for-Profit Protector insureds choose their defense
attorney from among National Union’s list of “Panel Counsel,”
a roster of leading employment law firms that have extensive
experience dealing with the structures and legal issues of not-for-
profits. Panel Counsel firms collaborate with insureds to share
knowledge, techniques and plaintiffs’ tactics — allowing each
insured to build a uniquely effective defense. Insureds can interview
and select firms in advance of any claim. A listing of these firms
can be viewed at www.briefbase.com.
Risk: If severe types of damages handed down in employment
practices cases are not expressly covered in a not-for-profit’s D&O
and EPL policy, the insured is vulnerable in critical areas, including
front pay, back pay and emotional distress damages, as well as
pre- and post-judgment interest.
Solution: Not-for-Profit Protector spells out coverage for emotional
distress damages in employee and third-party discrimination claims
and specifically states its intent to pay front pay, back pay and
pre- and post-judgment interest costs in employment claims.
Exceptions to the Insured Versus
Risk: There are multiple claim situations that could pit insureds
against each other in court, such as when various board members
disagree on policy matters. Hence, excluding any claim made by one
of the policy’s insureds against another leaves a not-for-profit defendant
susceptible to serious losses.
Solution: Not-for-Profit Protector eliminates the industry-standard
“insured versus insured” exclusion, instead omitting coverage only in
the exceedingly rare event that a claim is made by the organization
against an individual insured (a situation in which a not-for-profit
would probably not want coverage to apply anyway).
Violations of the Sherman
Risk: Courts have ruled that not-for-profit organizations may be liable
for violations of the antitrust laws, which outlaw trusts and prohibit the
operation of illegal monopolies. Conduct which violates the antitrust
laws includes price fixing, market and customer allocation, bid rigging,
boycotts and exclusions, tying arrangements, price discrimination, and
use or attempted use of monopoly power to control prices or exclude
Solution: Not-for-Profit Protector provides coverage to not-for-profit
organizations, such as hospitals, fundraising organizations, universities
and labor unions against claims arising under antitrust laws, including
the Sherman Act and other federal and state acts.
Specific Segments Have Unique
Risk: Certain segments of the not-for-profit world, notably
healthcare institutions, educational institutions and homeowners
associations, face unique exposures not covered under traditional
not-for-profit organizational and individual insurance.
Solution: Not-for-Profit Protector expands coverage to encompass
the specific insureds and types of claims relevant to particularly
at-risk segments. For example, specialized endorsements protect
healthcare organizations in claims arising out of peer review and
credentialing practices; provide educators legal liability coverage
for educational organizations; and respond to the property man-
agement exposures of condo, coop and homeowners associations.
Specialized endorsements protect healthcare
organizations in claims arising out of peer review and
credentialing practices; provide educators legal liability
coverage for educational organizations; and respond
to the property management exposures of community
CrisisFund® is also available to support education, healthcare and
community governance organizations by funding the services of
crisis management public relations consultants who can help
mitigate adverse events—such as those arising from alleged
patient abuse or bankruptcy.
Dedicated Claim Service
Risk: If claim service is outsourced to third-party attorneys, the level
of expertise brought to an insured’s claim is usually uncertain at best.
Solution: National Union has a claims team of specialists dedicated
exclusively to managing not-for-profit D&O and EPL claims. Moreover,
each claim is handled by the same representative, who understands
the insured organization’s unique history, issues and concerns. The
experience of this claims team is unparalleled and its knowledge
continues to expand daily.
To learn more about Not-for-Profit Protector, contact your insurance
broker or your local National Union representative. You can also e-mail
us at email@example.com.
National Union is a member company of American International Group, Inc. (AIG).
AIG is the world’s leading international insurance and financial services organization,
with operations in approximately 130 countries and jurisdictions. AIG member
companies serve commercial, institutional and individual customers through the most
extensive worldwide property-casualty and life insurance networks of any insurer.
In the United States, AIG companies are the largest underwriters of commercial and
industrial insurance and AIG American General is a top-ranked life insurer.
AIG’s global businesses also include financial services, retirement services and asset
management. AIG’s financial services businesses include aircraft leasing, financial
products, trading and market making. AIG’s growing global consumer finance busi-
ness is led in the United States by American General Finance. AIG also has one of
the largest U.S. retirement services businesses through AIG SunAmerica and AIG
VALIC, and is a leader in asset management for the individual and institutional
markets, with specialized investment management capabilities in equities, fixed
income, alternative investments and real estate. AIG’s common stock is listed on
the New York Stock Exchange, as well as the stock exchanges in London, Paris,
Switzerland and Tokyo.
Insurance underwritten by members of American International Group, Inc. The description herein is a summary only.
It does not include all terms, conditions and exclusions of the policy described above. Please refer to the actual policy for
complete details of coverage and exclusions. Coverage may not be available in all states. Issuance of coverage is subject to
underwriting. Non-insurance products may be provided through independent-third parties.
70 Pine Street
New York, NY 10270
68429 AMS 3.5M 3/04