[Kzyxtalk] Liability of Directors, Insurance

[sako4 at comcast.net]

DEnnis, 

Liability insurance is not retroactive to mistakes made in the past, .i.e., during John Coate's tenure, correct? 

John 

----- Original Message -----

From: dennisobrien at sharejerusalem.com 
To: "kzyxtalk" <kzyxtalk at lists.mcn.org> 
Cc: "MCPB Board" <BOD at kzyx.org> 
Sent: Monday, June 13, 2016 4:23:25 PM 
Subject: [Kzyxtalk] Liability of Directors, Insurance 

Volunteer directors of a nonprofit corporation are not liable for monetary damages only if the corporation carries liability insurance (see Corporations Code Section 5239, below). 

I do not offer an opinion as to whether any of the issues raised on this list could give rise to a claim for monetary damages. However, I am concerned by the report, if accurate, that the organization does not at this time carry liability insurance. Even in the smaller nonprofits I have assisted, liability insurance was a top priority when budgeting resources. 

Dennis 


5239. (a) There shall be no personal liability to a third party for 
monetary damages on the part of a volunteer director or volunteer 
executive officer of a nonprofit corporation subject to this part, 
caused by the director's or officer's negligent act or omission in 
the performance of that person's duties as a director or officer, if 
all of the following conditions are met: 
(1) The act or omission was within the scope of the director's or 
executive officer's duties. 
(2) The act or omission was performed in good faith. 
(3) The act or omission was not reckless, wanton, intentional, or 
grossly negligent. 
(4) Damages caused by the act or omission are covered pursuant to 
a liability insurance policy issued to the corporation, either in the 
form of a general liability policy or a director's and officer's 
liability policy, or personally to the director or executive officer. 
In the event that the damages are not covered by a liability 
insurance policy, the volunteer director or volunteer executive 
officer shall not be personally liable for the damages if the board 
of directors of the corporation and the person had made all 
reasonable efforts in good faith to obtain available liability 
insurance. 

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