The society is incorporated. That does not put the board out of reach.
Incorporation protects the members and the organisation. It does not stop a director being named personally in a claim, and it does not pay for the lawyer who answers it. Being unpaid is not a defence.
Start a quote file Read the short answer firstGeneral liability covers injuries, not decisions.
Defending the claim is usually the bigger number.
Leaving the board does not end the exposure.
Can a volunteer director of a BC society be sued personally?
Yes. A director can be named personally in a claim even when the society is incorporated and even when the director is unpaid, because the claim is about how a decision was made rather than about who was paid to make it. Incorporation limits what members owe, not what a board member can be asked to answer for. Directors and officers insurance is the cover written for that, and it pays defence costs as well as any settlement.
Most boards assume the society’s general liability policy has them covered, and it is a reasonable assumption to make, because that policy is the one everybody has seen. General liability answers bodily injury and property damage. A claim about a decision, a dismissal, a member expelled or money spent the wrong way is not bodily injury or property damage, so it is not a general liability claim.
Directors and officers claims are frequently defended and not paid. That sounds like good news until you look at what defending one costs. Legal fees run from the first letter, long before anyone decides whether the claim has merit, and they run whether the board acted properly or not. A society with a modest budget can be forced into a decision about whether to fight at all, and that is the moment the insurance either exists or it does not. The indemnity written into the society’s own bylaws is worth exactly what the society can afford to pay.
Four covers, four different questions.
General liability
Somebody was hurt at your event, or something of theirs was damaged. This is the policy that answers a slip at the community hall or a volunteer reversing into a parked car. It is essential and it is not in dispute. It simply does not reach decisions made in a meeting.
Directors and officers
A decision is challenged. A dismissal, an expulsion, a contract, a grant spent on the wrong programme, a complaint about how a vote was run. It covers the individuals and it usually covers the society as an entity as well, and defence costs sit inside the limit unless the wording says otherwise.
Employment practices
Claims brought by staff rather than by members or funders. Wrongful dismissal, harassment and discrimination allegations, failure to promote. Sometimes this is a section inside the directors and officers wording and sometimes it is bought separately. Which one you have decides whether the most common claim a small society faces is covered at all.
Fidelity or crime
Money taken by someone inside the organisation. Societies with few staff and a single bookkeeper carry more of this exposure than they think, and funders increasingly ask for the cover by name in their agreements. It is not part of directors and officers, though the two are often bought together.
Three assumptions worth checking at the next meeting.
The director who resigned
A claim arrives about a decision made three years ago. The people who made it have long since rotated off the board. Cover is usually triggered by when the claim is made rather than when the decision was taken, so a policy that has lapsed protects nobody, including the people who have already left. This is the reason a society should not let the cover drop between funding cycles.
The employee nobody expected to sue
Employment claims are the most common claims small non-profits face, and they rarely come from the situation the board worried about. A part-time coordinator let go at the end of a grant is a normal event that turns into a legal letter. Whether that letter is covered depends on one thing: whether employment practices sits inside your wording.
The funder’s requirement read too late
Grant agreements and government contracts often name the covers required and the limits they expect. Boards tend to read that clause the week the agreement is signed, which is also the week the programme is supposed to start. Reading it a month earlier costs nothing and avoids a rushed placement at whatever terms are available.
The ones that come up when the cover is being renewed.
We are all volunteers. Do we really need this?
Being unpaid does not change the duties that come with sitting on a board, and it does not stop a lawyer naming you. If anything, a volunteer board carries more of this exposure than a staffed one, because there is often no in-house expertise to catch a problem early. The cover is generally modest for a small society.
Is the society covered, or just the individuals?
Most modern wordings cover both, in separate parts. One part covers directors and officers when the society cannot indemnify them, another reimburses the society when it does, and a third covers the society itself as an entity. Which parts you have and how the limit is shared between them is worth reading, because they usually share one limit.
Are our volunteers covered too, not just the board?
That depends on the wording. Many policies extend the definition of insured person to committee members, employees and volunteers acting for the society, and many do not. It is a single line in the definitions and it is easy to check. Do not assume it, because volunteer-heavy organisations are exactly where a claim is most likely to name someone outside the board.
Can directors be held responsible for unpaid wages or unremitted amounts?
In certain circumstances directors of a corporation can carry personal responsibility for some amounts a corporation has failed to pay, including certain employee entitlements and certain amounts owed to government. The rules are set out in the relevant legislation and the specifics depend on the situation, so this is a question for your lawyer rather than for a website. Bring it up with your broker as well, because whether a policy responds to that class of claim varies between wordings.
Our funder asks for a certificate. Is that the same as being covered?
No. A certificate proves a policy existed on the day it was issued. It does not prove the limits are adequate, that the wording covers the activity the grant pays for, or that the cover is still in force today. Send the funder’s clause and the certificate together and you will get a written answer on whether the two actually match.
Not the question you had? Send the funder’s clause or your current policy through the quote file and you will get a written answer, not a sales call.
Put it on the next agenda while it is still a question.
Send your current policy and any funder requirement. You will get a written note on what is covered, what is not, and what it would take to close the gap.