Forget your personal umbrella policy. Here’s the D&O insurance that actually protects your HOA board.
The Neighborly Lawsuit
As a new Homeowners Association board member, I thought my personal umbrella policy gave me all the extra liability protection I needed. Then, our board voted to approve a special assessment to repair the community pool. An angry group of homeowners sued every board member personally, not for an injury, but for mismanaging the association’s funds. My umbrella policy provider quickly denied the claim, stating it doesn’t cover decisions made as a director. I learned the hard way that a personal policy doesn’t cover board actions. For that, we needed Directors & Officers (D&O) insurance.
Stop chasing more members for your garden club. Chase a solid general liability policy for your annual plant sale instead.
The Tripped-Over Tulip
Our garden club was obsessed with growing our membership numbers. We poured all our energy into outreach and events. At our big annual plant sale fundraiser, a visitor tripped over a hose we had left running across a walkway. They fell and broke their ankle. The resulting lawsuit for medical bills threatened to wipe out our club’s entire bank account. We were so focused on getting more members that we completely forgot to protect the club itself. That day, we learned that a general liability insurance policy was far more important than a new member.
The hidden truth about insuring a community tool library that city governments won’t admit.
The City’s Fine Print
Our community tool library was thrilled to partner with the city to use a small, vacant building for free. We assumed that since it was a city building, their insurance would cover us. Then a member was badly injured using a saw they had borrowed. When they sued, we discovered the truth buried in our facility use agreement: we were required to carry our own liability insurance and to indemnify the city, meaning we had to protect them. The city wasn’t our protector; they were just our landlord, and we were completely on our own.
What nobody tells you about the liability of running a small, volunteer-led museum.
The Story of the Fallen Artifact
Our small town historical museum was a labor of love, run entirely by dedicated volunteers. A kind patron loaned us a rare, valuable pocket watch for a new exhibit. While cleaning the display case, a well-intentioned volunteer accidentally dropped the watch, shattering its porcelain face beyond repair. Our basic property policy didn’t cover items on loan to us. We learned that running a museum, even a small one, means you are a custodian of other people’s property. You need a specific policy, called bailee’s coverage, to protect those priceless, borrowed treasures.
I spent 10 years as treasurer for a historical society. Here’s what I learned about protecting donated assets.
The Disappearing Donation Fund
As treasurer, I watched our society work for two years to raise $20,000 to restore a historic town landmark. The money was kept in our general operating account. One day, I discovered our long-serving, trusted bookkeeper had been quietly writing checks to themself, and the entire restoration fund was gone. We had insurance for slips and falls, but nothing to cover internal theft. I learned the most painful lesson: you must have crime and fidelity insurance. It’s the only thing that protects your mission from the devastating possibility of employee or volunteer embezzlement.
Unpopular opinion: Your 501(c)(3) status is not a substitute for liability insurance.
The Tax-Exempt Lawsuit
When our small animal rescue finally received its 501(c)(3) status from the IRS, we celebrated. We felt official and, on some level, protected. We thought being a non-profit charity put us on a different level. That feeling vanished when a dog we had adopted out bit a neighbor. The subsequent lawsuit named our organization. We quickly learned that our tax status is irrelevant in a courtroom. It simply means we don’t pay income tax; it does not, in any way, shield us from being held liable for negligence. It’s a tax classification, not a suit of armor.
90% of amateur sports league organizers don’t understand this about participant accident coverage.
The Injury That Sacked the Season
I organize a local amateur football league. We had general liability insurance, which I thought covered everything. In our first game, a player was tackled and suffered a serious knee injury, requiring surgery. He had poor health insurance and couldn’t afford the deductible. He sued our league to cover his medical bills. I learned that general liability often excludes injuries to participants engaged in athletic activities. What we needed was a separate participant accident policy. It provides no-fault medical coverage for players, helping to prevent those injuries from turning into expensive lawsuits.
This simple volunteer waiver transformed our club’s insurability.
The Signature That Saved Us
Our environmental club runs on volunteer power for our river clean-up days. For years, we couldn’t get affordable insurance because the carriers saw a high risk of volunteer injuries. Our broker gave us a tip: work with a lawyer to draft a strong, state-specific volunteer waiver. The waiver clearly outlined the risks of the activity and had volunteers acknowledge them. We made signing it mandatory. When we showed our new, required waiver to the insurance underwriters, they saw we were actively managing our risk. Our quote was suddenly affordable, and we became insurable.
You’re not struggling to find board members because of the time commitment. It’s because of the uninsured personal liability.
The Seat Nobody Wanted
Our non-profit had a hard time recruiting new board members. We assumed it was because people were too busy. The truth came out when a candidate I was courting, a respected local accountant, asked me, “Does the organization carry Directors & Officers insurance?” I didn’t even know what that was. He politely declined, explaining that he couldn’t expose his personal assets to potential lawsuits for decisions made as a volunteer board member. We learned people weren’t afraid of the time commitment; they were afraid of the uninsured personal risk.
Stop buying a generic event policy. Buy one with host liquor liability for your fundraising dinner.
The Wine-Tasting That Went Wrong
Our literary society decided to host a fundraising dinner with a “wine-tasting” theme to attract more guests. We bought a standard special event insurance policy. An attendee had a bit too much wine, and on their way home, they were involved in a car accident that injured another person. Because we had served the alcohol, our club was named in the lawsuit. Our generic event policy had a clear liquor liability exclusion. We learned that the moment you are the host serving alcohol, you need a specific host liquor liability policy to be protected.
The uncomfortable truth about insuring a volunteer fire department.
More Than Just Putting Out Fires
Everyone thinks a volunteer fire department’s biggest risk is a firefighter getting hurt in a blaze. While that’s a major concern covered by workers’ compensation-like policies, the risks are much broader and more uncomfortable. What happens if, in the rush to a scene, the fire truck is involved in a major traffic accident? What if the board of directors is sued for mismanaging community funds? A volunteer fire department isn’t just a group of heroes; it’s a complex organization that needs commercial auto, D&O, and liability insurance, just like any other high-risk emergency service.
Why everything you know about insuring your community theater group is backwards.
The Audience Is Not the Only Risk
When our community theater group first bought insurance, we were only worried about an audience member tripping in the dark. We got a basic liability policy. But our biggest risks were things we never considered. We had a volunteer fall off a ladder while building a set. A valuable, borrowed prop was stolen from the dressing room. A libel claim was threatened over a character’s portrayal in a play. We learned that insuring a theater group is not just about the audience; it’s about protecting your volunteers, your property (owned and borrowed), and your productions themselves.
I tried to run a pickleball tournament without participant liability insurance. It was a disaster.
The Friendly Game That Wasn’t
Our club hosted a weekend pickleball tournament. The vibe was fun and friendly. We had a general liability policy for the venue. On the second day, a player lunged for a shot, fell, and tore their Achilles tendon. The injury required surgery and months of rehab. They didn’t have great insurance and sued our club, claiming the court surface was unsafe. Our general liability policy wouldn’t cover injuries to athletic participants. The lawsuit that followed from that “friendly” game nearly bankrupted our club. We learned the hard way about the need for participant accident insurance.
Hot take: Your “passionate” board of directors is overrated if they’re making uninformed, uninsured decisions.
When Passion Isn’t Enough
Our non-profit was led by a board of incredibly passionate founders. They lived and breathed our mission. But their passion made them impulsive. They would make big financial decisions based on gut feelings and verbal agreements, without legal review or proper due diligence. When a major project failed and a contractor sued the board for breach of contract, their passion was no defense. A passionate board is great, but a professional, disciplined board that understands its fiduciary duty and is protected by D&O insurance is what actually ensures an organization’s long-term survival.
Most club leaders waste hours on meeting minutes. Spend an hour on a basic risk management audit instead.
Minutes Don’t Stop Lawsuits
As a club president, I used to obsess over getting the meeting minutes perfect. I thought it was the hallmark of a well-run organization. Then, after a visitor was injured at one of our events, I spent more time with lawyers than I ever did with my minutes. I realized that while minutes are important, they are reactive. A simple, one-hour annual risk management audit is proactive. Walking through your activities and asking, “What’s the worst that could happen here, and are we insured for it?” is an exercise that can actually prevent a disaster, not just document one.
The 5-minute habit that replaced my fear of a visitor slipping and falling at our clubhouse.
The Pre-Meeting Walkthrough
Every time we held a meeting at our small clubhouse, I had a nagging fear that someone would trip on a rug or slip on a wet spot by the door. Then I started a simple 5-minute habit. Before unlocking the doors for any event, I do a quick, documented walkthrough. I check the entrance for hazards, make sure the walkways are clear, and straighten any loose mats. I even take a quick photo with my phone as a record. This simple proactive check replaced my vague fear with a confident, documented process of ensuring guest safety.
Your club’s biggest risk isn’t financial trouble. It’s an uninsured decision that leads to a lawsuit against the board.
The Vote That Cost Everything
Our fishing club was struggling financially. Everyone on the board was worried about our budget. We thought that was our biggest risk. To save money, the board voted to cancel our liability insurance policy for our annual fishing tournament. During the event, a visitor walking on the dock was accidentally hooked by a member’s backcast, suffering a serious eye injury. The resulting lawsuit wasn’t just against the club; it was against the board members personally for their negligent decision. We learned that financial trouble is survivable; a lawsuit against an uninsured board is not.
If you’re a treasurer for a non-profit, and you’re not carrying crime and fidelity insurance, you’re already exposed.
The Treasurer’s Blind Spot
As the new volunteer treasurer, my focus was on the budget and financial reports. I thought my duty was simply to track the money. I never considered the risk of someone stealing it. Then I learned about a neighboring organization where the treasurer’s signature was forged on checks by another trusted volunteer, draining their account over six months. I realized that my responsibility wasn’t just to manage the money, but to protect it. Crime and fidelity insurance, which covers losses from theft and fraud, became the first thing I advocated for. Without it, I was treasurer of an unprotected vault.
Stop glorifying the “all-volunteer” spirit. Start protecting those volunteers with proper insurance.
Good Intentions, Uncovered Injuries
Our community garden was proudly “all-volunteer.” We celebrated the spirit of people giving their time for free. That spirit was shattered when one of our most dedicated volunteers, an elderly woman, tripped over a misplaced shovel and broke her hip. She couldn’t work, and her medical bills were high. Because she was a volunteer, not an employee, she wasn’t covered by workers’ compensation. We learned that glorifying the “all-volunteer” model without backing it up with volunteer accident insurance is irresponsible. Protecting the people who give their time is the most important mission of all.
The real cost of a “free” potluck dinner that nobody calculates until the food poisoning claims arrive.
The Casserole Catastrophe
To build community, our club hosted a “free” potluck dinner where members brought a dish to share. It was a wonderful evening, until it wasn’t. The next day, calls started pouring in. A dozen members had come down with a nasty case of food poisoning, traced back to a single dish. Two people required hospitalization. Because the club “hosted” the event, we were the target of the claims for medical bills and lost work. That “free” dinner became a very expensive lesson in the liability of community food events.
What professional associations do with their insurance that small clubs don’t.
The Portfolio Approach
A small hobby club typically buys a single general liability policy and thinks they’re done. A professional association, however, treats insurance like a portfolio. They know that no single policy covers everything. They layer different coverages to create a comprehensive safety net. They have general liability for events, D&O for their board’s decisions, crime insurance for their funds, and often professional liability for the advice they give. They don’t just buy a policy; they build a risk management program. That’s the difference between an amateur club and a professional organization.
The myth that “we’re just a small club” will protect you in court is destroying community organizations.
There’s No “Small Club” Defense
Our model railroad club was sued when a visitor to our annual exhibition tripped over a power cord and broke their arm. In our first meeting, one of our older members said, “Don’t worry, the court will see we’re just a small, harmless club of old guys.” Our lawyer quickly corrected him. He explained that in the eyes of the law, there is no “small club” defense. We are an organization that invited the public to an event, and we had a duty of care. Our size and our harmless intentions were legally irrelevant.
I quit letting our club operate without D&O insurance, and our ability to attract qualified board members skyrocketed.
The Cost of Uninsured Risk
For years, our non-profit board was composed of the same few passionate but overworked founders. We could never attract skilled professionals from the community—lawyers, accountants, executives. They were always “too busy.” I finally realized the problem was risk, not time. I convinced the board to purchase a Directors & Officers (D&O) liability policy. The next time I approached a prominent local accountant to join our board, his first question was about D&O. When I said yes, he accepted on the spot. I learned that D&O isn’t an expense; it’s a recruitment tool.
Controversial: Your charming, old clubhouse is a massive, uninsurable fire and liability trap.
The Nostalgia That Became a Nightmare
Our club was so proud of our charming, 100-year-old clubhouse. It was the heart of our organization. But its charm was also its downfall. The wiring was ancient, the plumbing was suspect, and it had no modern fire suppression system. Our insurance company dropped us, citing the massive fire risk. Other carriers wouldn’t touch it. We were left with a building that was a beloved icon but also a completely uninsurable liability trap. We learned the hard way that nostalgia doesn’t pay for a new building after a fire, or a lawsuit after a fall.
95% of advice about starting a club ignores the fundamental need for liability protection. Here’s why.
The Fun Part vs. The Smart Part
Online guides about starting a club are all about the fun stuff: picking a name, finding members, planning activities. They rarely mention insurance or liability. Why? Because legal risks and insurance paperwork are boring and intimidating. It doesn’t fit the exciting narrative of building a community around a shared passion. So, this critical, foundational step is simply left out. This creates a generation of clubs that are built on enthusiasm but have no protection, leaving them incredibly vulnerable to the first time something inevitably goes wrong.
One small accident medical policy for our volunteers eliminated our biggest worry.
The Volunteer Safety Net
Our biggest fear at our annual street festival was one of our volunteers getting hurt. They aren’t employees, so they aren’t covered by workers’ comp. If someone fell off a ladder or cut themselves, they would be on their own for their medical bills, which could lead to a lawsuit against us. Then our broker told us about volunteer accident medical insurance. It’s a low-cost policy that provides no-fault medical coverage for volunteers injured while working for us. It became our safety net, ensuring our volunteers get the care they need without having to sue us.
The truth about insuring property on loan to your small museum that donors profit from hiding.
The Donor’s Fine Print
A wealthy collector loaned our small museum a valuable painting. The loan agreement he provided was simple and friendly. We signed it without a second thought. When the painting was damaged by a leak, we discovered a clause buried in the fine print: we were responsible for providing “wall-to-wall, all-risk” insurance coverage for the painting’s full appraised value. His personal insurance wouldn’t cover it while it was with us, and our basic policy didn’t either. We learned that donors often expect the museum to bear the full cost and risk of protecting their loaned property.
Stop holding events without getting certificates of insurance from all your vendors. It’s killing your protection.
The Food Truck Fire
Our club hosted a “community day” and invited several food trucks. We didn’t bother asking them for insurance paperwork; it seemed too formal. During the event, a propane tank on one of the trucks caught fire, causing damage to the park facility and injuring a bystander. The food truck owner was underinsured. Because we were the event organizers, the lawsuit came after us. If we had simply required a “certificate of insurance” from the vendor naming our club as an additional insured, their policy would have been the first line of defense, not ours.
Replace your hope for a safe meeting with a documented safety checklist for your facility. Thank me later.
Hope Is Not a Safety Plan
Before every club meeting, I used to just hope everything would be fine. I hoped nobody would trip, slip, or fall. But hope is not a strategy. I replaced that hope with a simple, laminated checklist. Before anyone arrives, I do a 5-minute walk-through: check walkways, look for spills, secure any loose cords, and make sure the fire exit is clear. I literally tick the boxes. This simple, documented process transformed my thinking from passive hope to active management. It’s a tangible record that our club takes safety seriously before every single gathering.
The amateur radio club secret that could save you from a massive tower collapse liability claim.
The Towering Risk
As an amateur radio club, our biggest asset and our biggest liability is the massive radio tower behind our clubhouse. A standard property and liability policy will almost certainly not cover it. The secret shared among experienced clubs is the need for a specialized tower insurance policy. This covers the unique risks of a tower: physical damage from wind or ice, and more importantly, the immense liability if the tower were to collapse and damage neighboring property or cause an injury. Without this specific, hard-to-find coverage, a single windstorm could create a multi-million dollar disaster for the club.
Why your traditional non-profit policy fails for a club with high-risk activities like rock climbing or caving.
The Adventure Activity Exclusion
Our university outing club got a standard non-profit insurance policy. We thought we were covered. Then, on a club-sanctioned rock climbing trip, a student was injured. When we filed the claim, the insurer pointed to the fine print. The policy had a clear exclusion for any claims arising from “hazardous recreational activities,” and it listed rock climbing, caving, and kayaking by name. We learned that if your club’s core purpose involves activities that most insurers see as high-risk, a generic policy is useless. You need a specialty underwriter who focuses on the outdoor and adventure industry.
I ignored my lawyer’s advice to incorporate our club for years. It exposed every member to personal liability.
The Unincorporated Risk
Our cycling club operated for years as a simple, unincorporated association. It was easy. Our lawyer kept advising us to incorporate and become a formal non-profit. We ignored him, thinking it was too much paperwork. Then, during a group ride, a member caused an accident involving a car. The driver sued not just the member, but the club itself. Because we were unincorporated, the “club” had no legal separation from its members. Every single member was personally named in the lawsuit and exposed to liability. We learned that incorporation isn’t just paperwork; it’s a legal shield for everyone.
Let’s be honest: Your “member responsibilities” document is not a legally binding contract.
The Wishful Thinking Document
Our hiking club had a “member responsibilities” document on our website. It said members were responsible for their own safety and had to be in good physical condition. We thought this protected us. Then, a member had a heart attack on a strenuous hike and their family sued the club, claiming we didn’t properly warn them of the difficulty. Our lawyer explained that our online document was not a defense. It was not a signed, legally binding waiver or contract. It was just a list of suggestions. A court would likely see it as wishful thinking, not a legal shield.
87% of neighborhood watch groups get their liability insurance wrong. Don’t be one of them.
The Watchful Eye and the Lawsuit
When we started our neighborhood watch group, we thought our only job was to “observe and report.” We never imagined we could be sued. But what if a member mistakenly reports a suspicious person, leading to a false arrest and a lawsuit for slander and defamation? What if a member, in a moment of panic, tries to physically detain someone and an injury occurs? Most groups are completely uninsured for these risks. A proper policy for a neighborhood watch needs to cover the specific personal and advertising injury risks that come from the very act of watching and reporting on your neighbors.
This weird habit of reading your D&O policy’s exclusions outperforms trusting the summary every time.
The Devil in the Exclusions
Our non-profit board received the renewal for our Directors & Officers (D&O) policy. It came with a nice, one-page summary from our broker that made everything look great. As the treasurer, I decided to do something weird: I actually read the full 30-page policy document, specifically the “Exclusions” section. I found an exclusion for any claims related to employment practices. Since our small non-profit had just hired its first employee, this was a massive gap. The summary never mentioned it. Trusting the summary is easy; reading the exclusions is what actually protects your board.
The real reason you can’t get affordable insurance for your ski club (hint: it’s not a secret).
The High-Speed, High-Risk Reality
Your ski club is trying to get liability insurance for your group trips and races, but the quotes are astronomical. The reason is simple and not a secret to the insurance world: skiing is an inherently dangerous, high-speed activity with a high frequency of serious injuries. Insurers don’t see a fun club; they see a long history of expensive claims for things like ACL tears, head injuries, and collisions. They price the policy based on the cold, hard data of how often skiers get hurt, and that makes coverage for any organized ski activity one of the most expensive policies to buy.
Ditch your basic liability. Get a policy that includes coverage for events held at member’s homes.
The Backyard Barbecue Lawsuit
Our social club decided to save money by holding our annual summer party at a member’s house instead of renting a hall. We had a basic club liability policy. During the party, a guest who was not a club member slipped on the host’s patio steps and broke their leg. They sued both the homeowner and the club. Our club’s insurance denied the claim because the event was not held at a designated, insured location. We needed a policy that specifically extended coverage to “off-site” events, including those hosted at the homes of our members.
Stop pretending your members are experts. Get insurance that covers their well-intentioned, but negligent, acts.
The Good Intention, The Bad Result
Our historical society’s board was made up of passionate history buffs, not financial experts. During a downturn, the board, with the best of intentions, voted to invest the society’s small endowment in what turned out to be a risky stock, and they lost most of it. A group of members sued the board for negligence and breach of their fiduciary duty. We learned that good intentions don’t matter when you make a bad decision. Directors & Officers (D&O) insurance is designed for this exact scenario: to protect a board of well-meaning volunteers from the consequences of their honest, but ultimately harmful, mistakes.
The 9-word phrase that changed how I think about volunteer organization risk.
Good intentions are not a legal defense.
During a board meeting, our lawyer said something that has stuck with me ever since: “Good intentions are not a legal defense.” Our club had always operated on the belief that because we were volunteers doing good things for the community, we would be fine. That phrase shattered the illusion. It made me realize that in the event of an injury or a financial mistake, the legal system wouldn’t judge our hearts. It would judge our actions, our decisions, and our preparedness. It forced our entire organization to stop relying on goodwill and start relying on professional risk management.
What your city’s parks and recreation department doesn’t want you to know about their facility use agreement.
The One-Way Protection
When your soccer league signs a facility use agreement to use the city fields, it looks like a simple permission slip. But buried in the legal language is what the city doesn’t advertise: the agreement is designed entirely to protect them, not you. It will almost always require your league to have its own liability insurance, to name the city as an “additional insured,” and to sign an indemnification clause promising to pay for any lawsuits that arise from your activities. The city isn’t providing you with protection; they are legally requiring you to bring your own and to protect them as well.
I was today years old when I learned our club could be liable for libel and slander in our newsletter.
The Gossip Column That Cost Us
Our yacht club published a monthly newsletter with a “club news” section that was often filled with lighthearted gossip. In one issue, we joked about a member’s boat having some “questionable” repairs done. The member, who was trying to sell his boat, was furious. He claimed our newsletter article constituted libel and had cost him a potential sale. He threatened to sue. I was today years old when I learned that our club’s general liability policy might not cover this. We needed specific “personal and advertising injury” coverage to be protected from the words we print.
Normalize making D&O insurance a non-negotiable part of your club’s annual budget.
The Line Item of Survival
In our club’s budget meetings, insurance was always treated as an optional expense we could trim if money was tight. Directors & Officers (D&O) insurance was seen as a luxury. This is backwards. D&O insurance isn’t a luxury; it’s a survival tool. It’s what allows you to attract qualified board members and protects their personal assets from lawsuits over their decisions. We need to normalize treating D&O as a fixed, non-negotiable line item in the annual budget, just like rent or electricity. It’s the cost of having a protected, professional, and sustainable leadership team.
Plot twist: Your most dedicated volunteer isn’t the problem. The lawsuit from the person they accidentally injured is.
The Volunteer and the Victim
Brenda was our library’s most dedicated volunteer. She did everything. One afternoon, while rushing to shelve a cart of books, she accidentally bumped into an elderly patron, who lost their balance, fell, and broke a hip. Brenda felt terrible, but her sorrow didn’t stop the patron’s family from filing a massive lawsuit against our library for the injury. The plot twist for many organizations is realizing that the risk isn’t a bad volunteer. The risk comes from a good, well-intentioned volunteer making a simple, human mistake that injures a third party, and you need liability insurance for that moment.
The policy endorsement for “hired and non-owned auto” for volunteer drivers everyone ignores.
The Pizza Run That Wrecked the Budget
To reward our teen volunteers, I asked one of them to drive their own car to pick up a large pizza order for our meeting. On the way, they ran a stop sign and caused an accident. Because they were “on an errand for the club,” the injured party’s lawyer named our non-profit in the lawsuit. Our general liability policy didn’t cover auto accidents. We learned we needed a “hired and non-owned auto” liability endorsement. It’s a cheap, often-ignored add-on that protects the organization when volunteers use their own vehicles for club business.
Stop optimizing for low membership dues. Optimize for a budget that includes proper insurance.
The Dues That Don’t Defend
Our club was proud of having the lowest membership dues in the state. We kept them low by cutting “non-essential” costs, and we always put insurance in that category. It was a point of pride until we were hit with our first lawsuit. We quickly realized that our low dues were a false economy. We had no money in the bank and no insurance to defend ourselves. We should have been optimizing for a budget that guaranteed our survival. A club with slightly higher dues that can afford proper insurance is far more stable than a cheap one that can be wiped out overnight.
The brutal truth about why your passion for the mission doesn’t protect your personal assets.
The Passionate, Unprotected Board Member
I poured my heart and soul into founding a local arts non-profit. I was the board president, and my passion for our mission was all-consuming. I never thought about personal risk. Then, the board was sued by a disgruntled former employee for wrongful termination. I was brutally awakened to the fact that my passion was not a legal shield. As a director of the corporation, I was personally named in the lawsuit. Without D&O insurance, my own personal assets—my home and my savings—were on the line. Passion fuels the mission, but only insurance protects the people who lead it.
Throw away your informal meeting notes. Formal, documented minutes are your best defense.
The Notes That Weren’t a Defense
Our board meetings were casual. Our secretary would jot down a few informal notes and email them out. We thought it was efficient. Then, our board was sued over a financial decision, and the plaintiff’s lawyer demanded our meeting minutes as part of legal discovery. Our informal, sloppy notes made us look unprofessional and disorganized. They showed no clear record of who voted, what was discussed, or why we made the decision we did. We learned that formal minutes, following a standard format, are not just a record; they are a critical legal document that forms your first line of defense.
The 60-second test that reveals if your club’s board members are personally protected.
Ask the Right Question
At your next board meeting, perform this simple, 60-second test. Ask the treasurer or president this question: “If the board is sued for a financial decision we make, and we lose, what insurance policy pays the legal bills and the judgment so it doesn’t come out of our personal bank accounts?” If they can’t immediately name “Directors & Officers Liability Insurance,” or if they vaguely say “our general liability policy,” then your board members are not protected. General liability doesn’t cover board decisions, and that means the risk falls on you personally.
Why everyone is wrong about how “expensive” D&O insurance is for a small non-profit.
The Cost of Being Wrong
Most small non-profit boards assume Directors & Officers (D&O) insurance is a luxury reserved for large corporations. They think it must cost tens of thousands of dollars. This is completely wrong. For a small club or non-profit with a simple structure and a small budget, a basic D&O policy can often be purchased for a few hundred to a couple of thousand dollars a year. When you compare that small, manageable premium to the potentially catastrophic cost of a single lawsuit against the board, you realize that D&O isn’t expensive. Being uninsured is what’s truly expensive.
Stop asking “how much to insure our club?”. Ask “what are the key exclusions for the activities we actually do?” instead.
The Question That Uncovers the Truth
When our running club first bought insurance, we called agents and asked, “How much to insure our club?” We got a range of cheap prices and bought the lowest one. Then we had a claim. We discovered our cheap policy had an exclusion for any injury to a participant in an “organized race or athletic contest.” The policy was worthless for our main activity. We learned to stop asking about price and start asking about exclusions. The right question is, “Can you show me in writing where this policy covers the specific risks of our club’s activities?”
The habit of creating an incident report for every single minor issue that I wish I’d started sooner.
The Paper Trail of Prevention
At our community center, we used to just verbally deal with minor issues—a small slip with no injury, a child’s scraped knee. We never wrote anything down. Then we were sued over a more serious fall, and the plaintiff’s lawyer made us look negligent by claiming we had no safety procedures. Now, we have a new habit. We fill out a simple, one-page incident report for everything, no matter how minor. It documents what happened, who was involved, and what we did. This paper trail has become our best evidence that we are a proactive, safety-conscious organization.
Here’s why generic non-profit advice is terrible for a group with physical assets, like a community garden.
When the Asset Is the Risk
Generic non-profit advice focuses on things like fundraising and board governance. But for a community garden, the biggest risks are physical. What happens when a member injures themselves with a sharp tool? What happens if the water system fails and floods a neighbor’s property? What about theft of tools from the shed? Generic advice rarely touches on the need for general liability, property insurance, and possibly even pollution liability for compost runoff. For a non-profit where the work is physical and land-based, the risks are more like a landscaping company than a standard charity.
I’ll say what everyone’s thinking: Your club’s board is operating with a shocking level of personal risk.
The Elephant in the Boardroom
Let’s just say what everyone in the room is too polite to mention. As a volunteer board member for a small non-profit without D&O insurance, you are one bad decision, one disgruntled employee, or one failed project away from being personally named in a lawsuit that could threaten your family’s financial future. Your passion for the cause is admirable, but it doesn’t change the legal reality. The level of personal financial risk that most small-club board members unknowingly accept is truly shocking, and it’s a disaster waiting to happen for thousands of organizations.
The skill of running a formal meeting that matters more than your passion for the club’s purpose.
The Gavel Is Mightier Than the Feeling
Our founder was incredibly passionate, but he ran our board meetings like a casual coffee chat. Decisions were made on feelings, and votes were informal. When the club faced a legal challenge, we had no formal record of our decisions to defend ourselves. I learned that the skill of running a structured, formal meeting—using basic parliamentary procedure, making clear motions, and recording official votes—is far more valuable for the club’s survival than raw passion. A formal process creates a clear, defensible record that protects the organization and its leaders from chaos and liability.
This counterintuitive action of creating more formal policies and procedures actually fixed our insurance problems.
The Structure That Saved Us
Our small club prided itself on being informal and flexible. We had very few written rules. But when we tried to buy insurance, we were either denied or given sky-high quotes. The underwriters saw our lack of structure as a huge risk. So, we did something that felt counterintuitive: we created more rules. We drafted a formal safety policy, a volunteer management plan, and a financial controls document. When we presented this new, professional binder of procedures to the insurance carriers, they saw us as a well-managed organization. Our rates plummeted, and we got coverage easily.
Why your good intention of “keeping things simple” is actually a massive legal and financial liability.
The Simple Path to a Lawsuit
The mantra of our new non-profit’s board was “let’s keep things simple.” We avoided formal bylaws, didn’t incorporate, and handled money casually. We thought this made us nimble and unbureaucratic. But our “simplicity” was actually just a lack of legal and financial safeguards. When a dispute arose between two members, we had no formal process to handle it. When funds were miscounted, we had no controls to point to. We learned that the proper legal structures and policies aren’t there to make things complicated; they are there to protect the organization and its members when things go wrong.
Quit using a personal bank account for your club’s finances. It’s not worth the risk.
The Commingled Catastrophe
When our book club started, the treasurer just used her personal checking account to handle our small dues and expenses. It seemed simple and easy. Then, the treasurer was unfortunately involved in a personal lawsuit completely unrelated to the club, and her personal bank account was frozen by a court order. All of our club’s funds were frozen along with it. We had no access to our own money. We learned a critical lesson that day: a club needs its own, separate bank account with a formal structure. Commingling funds is a recipe for disaster.
The metric everyone tracks (number of members) that means absolutely nothing if one lawsuit bankrupts the organization.
The Vanity of a Large Roster
Our club president loved to boast at every meeting about our growing membership numbers. “We’re up to 300 members!” he’d announce proudly. Everyone would clap. We all saw that number as the ultimate metric of our success. Then, a single liability lawsuit from an event cost our club $50,000 to settle. We had no insurance and had to drain our bank account, nearly folding. I realized then that the number of members is a vanity metric. The only metric that leads to sanity is having a risk management plan that ensures the club can survive a major setback.
Stop calling it a “club.” Call it “a non-profit corporation with legal duties to its members and the public.”
The Shift in Semantics and Seriousness
As long as we called ourselves a “club,” we acted like one. We were informal, casual, and a little bit careless. Things felt low-stakes. Then our lawyer suggested we change our language. “You are not a club,” he said. “You are a non-profit corporation with legal, fiduciary duties to your members, your donors, and the public.” That single shift in language changed everything. It forced us to take our responsibilities more seriously. We started acting not like a hobby group, but like the legal entity we actually were. It was a change in mindset that professionalized our entire operation.
The decision I made to hire a specialist insurance broker for non-profits that everyone said was overkill (but found affordable coverage).
The Specialist Advantage
When our small charity needed insurance, the board told me to just call the local agent we all used for our cars. He was confused by our operations and came back with a wildly expensive quote. They told me it was overkill, but I spent a week searching for an insurance broker who specialized exclusively in non-profits. The difference was night and day. He understood our risks, he had access to special insurance programs just for non-profits, and he came back with a comprehensive policy that was half the price of the first quote. The specialist wasn’t overkill; he was essential.
What I learned from our first member injury lawsuit that changed our entire safety protocol.
The Lawsuit as a Learning Experience
A member of our woodworking club was injured using a table saw. The lawsuit that followed was a painful, expensive, and stressful experience. But it was also the most valuable learning experience our club ever had. It forced us to look at every single aspect of our operations through the lens of safety and liability. We completely revamped our training procedures, implemented a mandatory safety checkout for all power tools, and upgraded our equipment. The lawsuit almost killed our club, but the lessons we learned from it ultimately made us a much safer and stronger organization.
The common mistake of thinking your general liability covers wrongful acts of the board.
The Two Buckets of Risk
Our non-profit board always made sure our general liability insurance was paid up. We thought it was a catch-all policy that protected us from any lawsuit. Then, we were sued by a donor who claimed the board had mismanaged their restricted gift, a wrongful act. Our insurer explained that general liability is for “slips and falls,”—bodily injury and property damage. It does not cover the decisions and managerial duties of the board. For that, you need a completely separate policy: Directors & Officers (D&O) liability. We had protected the club’s actions but had left its leaders completely exposed.
PSA: Most “club insurance” plans sold online are a scam. Here’s proof of the gaps in coverage.
The Instant Policy with Instant Exclusions
I was tempted by a website offering “Instant Insurance for Clubs” at a rock-bottom price. It seemed perfect for our small chess club. Before buying, I decided to download and read the full policy document. It was a scam hiding in plain sight. The policy excluded any liability for events where more than 50 people were present, any activity involving food, and any claim made by one member against another. It basically only covered us if a single person tripped and fell during a meeting of 10 people. The cheap price was for a policy that was worthless for anything a real club actually does.
The skill of risk management that community leaders should learn but don’t.
The Missing Chapter in the Leadership Manual
We train community leaders on fundraising, public speaking, and volunteer management. But we almost never teach them the most fundamental skill of all: risk management. We don’t teach them how to identify potential liabilities, how to mitigate them through policies and procedures, or how to transfer them through insurance. This is a massive gap in leadership development. A leader who can’t protect the organization from predictable risks is not truly leading. The ability to safeguard the mission is a skill that is far more critical than the ability to run a bake sale.
This 5-minute action of creating a safety checklist for every event beats hoping for the best every time.
The Checklist That Creates Confidence
For every club event, big or small, we now use a simple, 5-minute safety checklist. It’s nothing fancy. Is the fire exit unblocked? Are the extension cords taped down? Is there a first-aid kit handy? Is the food being kept at a safe temperature? We designate one person to run through the list and sign it before the event begins. This simple action does two things: first, it genuinely makes our events safer. Second, it creates a documented record that we are a responsible organization that proactively considers the safety of our members and guests.
Why that cheap online insurer is actually doing it wrong for any organization that works with volunteers.
The Algorithm Doesn’t Understand Volunteers
I got a cheap, instant quote for our non-profit from a big online insurer. The process was slick and easy. But the algorithm never asked the most important questions. It never asked if we work with children, if our volunteers ever drive their own cars for our business, or what activities they perform. It just sold us a generic business policy. A real broker would know that working with volunteers creates unique risks that require specific coverages, like volunteer accident policies and non-owned auto liability. The cheap online insurer sold us a policy that was blind to our biggest risks.
Stop waiting for a problem. Start with a comprehensive review of your bylaws and insurance.
The Proactive Peace of Mind
Most clubs only look at their bylaws when there’s a fight, and they only look at their insurance policy after an accident. This is like looking at a map only after you’re already lost. The most effective way to run an organization is to be proactive. Once a year, our board schedules a two-hour meeting with one agenda: a full review of our governing documents and our insurance portfolio. We look for gaps, contradictions, and areas of risk. It’s the most productive meeting we have all year, and it allows us to solve problems before they ever happen.
The non-profit risk purchasing group I use that most small club presidents have never heard of.
The Power of Group Buying
When I tried to get D&O insurance for our small historical society, the standalone quotes were prohibitively expensive. We were too small. Then a mentor told me to look for a “risk purchasing group” or “risk retention group” for non-profits. These are insurance programs where thousands of similar non-profits band together to buy their insurance as a single, large entity. This gives them immense buying power. I found a group that offered a comprehensive portfolio of coverage designed for small non-profits, at a price we could actually afford. It’s a little-known secret that can be a lifesaver.
Your claims problem exists because you believe that good intentions are a legal defense. They are not.
The Court of Actions, Not Intentions
Every time our club had a small incident, our board’s attitude was, “We’re good people with good intentions; it will all be fine.” This belief was our biggest vulnerability. It made us careless about documentation and insurance. After our first real claim, we learned that the legal system is a court of actions, not intentions. It doesn’t matter how good your intentions were when you failed to salt the icy sidewalk. The only thing that matters is that you had a duty to provide a safe environment, and you failed to do so. Your good intentions will not pay the legal bills.
Delete that group chat app for official board business. Your legal discovery process will be cleaner.
The Text Message Trail
Our board used a group chat app for everything. It was fast and convenient for making quick decisions. Then our non-profit was involved in a lawsuit, and the opposing counsel subpoenaed all of our communications. Suddenly, they had access to years of our casual, sarcastic, and sometimes ill-advised text messages, completely out of context. Our lawyer was furious. We learned that official board business should only be conducted and recorded through official channels, like formal meetings and email. That group chat history became a messy, unprofessional liability we had created for ourselves.
The advice on volunteer screening I give that makes small clubs uncomfortable (but is necessary).
The Uncomfortable Conversation
When I advise small clubs to implement a formal screening process for new volunteers, they often get uncomfortable. “We’re a small, friendly group! We don’t want to seem untrusting.” But what if your club works with children, handles money, or deals with vulnerable populations? A simple, formal application and a basic background check aren’t about distrust; they are a necessary step to protect your members, your beneficiaries, and the reputation of your organization. It’s an uncomfortable conversation to have, but it’s a critical component of responsible management that you can’t afford to ignore.
Why the common fear of insurance paperwork is irrational and the real fear of personal financial ruin is ignored.
Focusing on the Wrong Fear
Volunteer board members often complain about the “hassle” of insurance—the applications, the paperwork, the cost. They fear the administrative burden. This is completely irrational. The paperwork might take a few hours a year. But the thing they should be afraid of—the very real possibility of being personally named in a lawsuit that could lead to financial ruin—is often completely ignored. They are focusing on the minor inconvenience while remaining blind to the catastrophic risk. A few hours of paperwork is a tiny price to pay to eliminate the fear of losing your house.
I tried to use a standard event policy for our recurring farmers market so you don’t have to. Here’s what happened.
The Recurring Risk Problem
I helped organize our town’s weekly farmers market. To get started, I bought a standard “special event” insurance policy online. It was easy. The policy was for a single event, so I had to buy a new one every single week. It was a logistical nightmare. More importantly, I discovered there was no coverage for claims that arose from something that happened weeks earlier. A proper annual policy, designed for a recurring event series, would have been simpler and would have provided the continuous “completed operations” coverage we desperately needed without the weekly hassle.
The question about “member-to-member” lawsuits that instantly reveals if a broker understands club liability.
When Members Sue Members
When I’m interviewing an insurance broker for our club, I always ask this question: “How does this policy respond to a lawsuit brought by one of our members against another member for something that happened at a club event?” If the broker fumbles or gives a vague answer, I know they don’t understand club liability. Many standard policies have an “insured vs. insured” exclusion that can void coverage in this scenario. A broker who understands the unique, internal risks of a membership organization will know exactly what this question means and how to address it.
This old-school method of using Robert’s Rules of Order for board meetings beats every informal get-together.
The Structure of a Fair Decision
Our board meetings used to be chaotic. The loudest voices dominated the conversation, and decisions were made without clear consensus. It led to resentment and confusion. Then we adopted a simplified version of Robert’s Rules of Order. There were formal motions, a clear process for debate, and official votes. It felt stiff and old-fashioned at first. But it was a game-changer. It ensured that every board member had a voice, that our decisions were made fairly and transparently, and that our minutes reflected a clear, defensible process. It brought order and professionalism to our chaos.
Stop romanticizing the “grassroots” organization. It’s a business that needs professional protection.
The Business of Community
We loved calling our organization “grassroots.” It made us feel authentic, humble, and pure. But that romantic language was holding us back. It allowed us to excuse our lack of structure, our poor financial controls, and our non-existent insurance. A “grassroots” organization is still a legal entity. It handles money, enters into contracts, and has a duty of care to its members and the public. It’s a business. The moment we stopped romanticizing our informal nature and started treating our organization like the small business it was, we began to protect it professionally.
The principle of “fiduciary duty” that guides every decision I make as a board member.
The Three Duties
When I joined my first non-profit board, a mentor taught me about the legal concept of “fiduciary duty.” It’s the board member’s fundamental obligation to act in the best interests of the organization. It breaks down into three parts: the Duty of Care (being informed and not negligent), the Duty of Loyalty (putting the organization’s interests before your own), and the Duty of Obedience (following the bylaws and mission). This principle became my North Star. For every vote I take, I ask myself if it satisfies these three duties. It is the core of responsible governance.
Why your club’s budget is vanity and your D&O policy limit is sanity.
The Numbers That Truly Matter
As a club treasurer, you might be proud of a detailed, balanced budget. You see the total revenue as a sign of health. That’s vanity. The number that represents sanity is the liability limit on your Directors & Officers insurance policy. Your budget can be wiped out by a single bad decision made by an uninsured board. The D&O limit is what protects the decision-makers and ensures the club can continue to even have a budget next year. A balanced budget is nice; a protected board is essential.
Forget being the most popular club. Aim to be the most stable and best-protected club.
Popularity Is Fleeting, Stability Is Forever
My club was always chasing popularity. We wanted more members, bigger events, and more attention than our rival clubs. We stretched our budget thin to host flashy parties. Meanwhile, a less “popular” club was quietly building a cash reserve, buying proper insurance, and strengthening their bylaws. When an economic downturn hit, our club, with its weak foundation, struggled to survive. The stable, well-protected club sailed through the storm without an issue. I learned that popularity is fleeting, but a reputation for stability and professionalism is what allows a club to endure for generations.
The realization that made me finally understand the difference between General Liability and Directors & Officers insurance.
The Action vs. The Decision
For years, I thought our club’s General Liability (GL) insurance covered everything. I finally understood the difference with this simple analogy. Imagine a volunteer is hanging a banner for our fundraising event and the ladder slips, injuring a passerby. The lawsuit that follows is for a physical action. That’s what GL insurance is for. Now, imagine the board of directors invests the club’s money in a risky venture and loses it all. The lawsuit from the members is for a bad decision. That’s what Directors & Officers (D&O) insurance is for. One covers actions, the other covers decisions.
What amateur boards do with conflicts of interest that professional boards never do.
The “It’s No Big Deal” Mistake
On an amateur board, a member might say, “My brother-in-law owns a printing company; we should use him for our newsletters. I’ll handle it.” They see it as being helpful. A professional board would never do this. A professional board has a formal conflict of interest policy. The board member would be required to disclose the relationship, recuse themselves from the discussion and the vote, and the board would be required to get at least two other competitive bids. Professionals document and manage conflicts; amateurs ignore them until they become a problem.
The investment in a legal review of your club’s formation documents that everyone avoids that has the highest ROI.
The Legal Checkup
Our club had been operating for 20 years using the same bylaws that were drafted by a founder with no legal background. We avoided paying a lawyer to review them because it seemed like an unnecessary expense. Then we had a major internal dispute that our vague, contradictory bylaws were completely unequipped to handle. It nearly tore the club apart. We ended up paying a lawyer far more to clean up the mess than it would have cost for a simple “legal checkup” years earlier. That initial review would have been the best money we ever spent.
Stop saying “our members.” Say “the individuals to whom our organization owes a duty of care.”
The Language of Responsibility
When we said “our members,” it felt personal and friendly. It created a sense of a tight-knit family. But that casual language masked a legal reality. Our lawyer advised us to shift our thinking. “Stop thinking of them as just members,” he said, “and start thinking of them as the individuals to whom your organization owes a legal duty of care.” That phrase, “duty of care,” changed our perspective. It reminded us that our relationship with our members wasn’t just social; it was a formal responsibility to keep them safe from unreasonable harm.
The truth about non-profit underwriting I couldn’t say as a standard lines underwriter.
The “Not Worth the Risk” Pile
As an underwriter for a big, standard insurance company, I saw applications from small non-profits all the time. The truth is, we usually declined them. It wasn’t because they were bad organizations. It was because they were small and unique, and our rigid, automated systems couldn’t properly price their risk. A small garden club or historical society just didn’t have enough premium to be worth the time and potential risk for a giant corporation. They would end up in the “decline” pile. The secret is that these clubs need a specialty broker who works with insurers who only focus on the non-profit world.
This tiny detail in the “insured vs. insured” exclusion can wipe out your D&O coverage.
When the Board Sues Itself
Our Directors & Officers (D&O) policy had a standard “insured vs. insured” exclusion, meaning it wouldn’t cover a lawsuit brought by one insured person (like a board member) against another. We thought this was fine. But then a disgruntled board member who was voted out of his position sued the rest of the board for wrongful removal. The insurance company denied the claim, citing the exclusion. He was a former “insured,” so the policy wouldn’t respond. This tiny detail can wipe out coverage for the most common type of internal board dispute, and it’s critical to understand.
Why a low premium is a trap for any organization that serves alcohol or works with children.
The Price of a Worthless Policy
Your club gets an insurance quote that is significantly cheaper than all the others. It’s tempting to take it immediately. But if your organization ever serves alcohol or works with children—two of the highest-risk activities a club can engage in—a low premium is a giant red flag. It is almost a guarantee that the policy contains specific exclusions for liquor liability or abuse and molestation claims. The policy is cheap because it has surgically removed the coverage you need most. That low premium is the price for a policy that is nothing more than a worthless piece of paper.
Replace your complicated club rules with a simple, clear, and insurable set of safety guidelines. You’re welcome.
The Unenforceable Rulebook
Our club had a 50-page rulebook filled with complex and outdated regulations. Nobody read it, and it was impossible to enforce consistently. Our insurance broker told us it was a liability. He said, “Replace that with a simple, one-page ‘Safety Guideline’ document that covers your top five risks in plain English.” We did, and it was a revelation. Our members actually read it, and we could easily enforce it. It also demonstrated to our insurance company that we were focused on managing our real-world risks, not just on having a thick but useless rulebook.
The skill of diplomacy that’s 10x more valuable than your passion for the hobby.
The Peacemaker’s Value
Our astronomy club was filled with people who were incredibly passionate about stars. Unfortunately, they were also passionate about arguing with each other over trivial matters. The club was constantly in a state of low-grade conflict. Our most valuable board member wasn’t the person who knew the most about telescopes. It was a retired diplomat who was a master of diplomacy. Her skill at de-escalating arguments, finding compromise, and keeping meetings civil was 10 times more valuable than anyone’s technical knowledge. She kept the club from tearing itself apart.
Stop treating your club’s insurance like an afterthought. Treat it as the first line item in your budget.
First In, Last Out
In our club’s budgeting process, we would allocate money for all the fun things first—parties, equipment, newsletters. Then, if there was any money left over, we would talk about buying insurance. It was an afterthought. This is completely backwards. Insurance is the single most important purchase the club makes. It’s the only thing that guarantees the club will survive to have parties and buy equipment next year. Insurance should be the first line item you fund, not the last. It’s the non-negotiable cost of doing business responsibly.
The experiment I ran of presenting our insurance and risk management plan at our annual meeting that proved our commitment to members.
The Transparency That Built Trust
I decided to try an experiment at our club’s annual general meeting. Instead of just glossing over the financials, I spent ten minutes presenting a clear summary of our club’s insurance policies and our key safety procedures. I explained what D&O and liability insurance were and how they protected the club and its members. I was nervous the members would find it boring. Instead, they were incredibly impressed. They told me it gave them confidence that the club was being managed professionally and responsibly. It proved that transparency about risk management is a powerful tool for building trust.
Why your old way of operating worked before but doesn’t in today’s litigious society.
The Handshake Agreement Era Is Over
For 30 years, our club ran on handshakes and unwritten rules. Everybody knew everybody, and problems were sorted out informally. It worked for a generation. But the world has changed. We live in a far more litigious society now. That old, informal way of operating is a massive liability today. A simple slip and fall that would have been brushed off with an apology in 1985 can become a major lawsuit in 2025. Your club’s procedures need to evolve to reflect the legal realities of the world we live in now, not the one we remember.
The choice to spend club money on insurance instead of a new piece of equipment that everyone judges that actually protects all the equipment.
The Invisible Shield
Our boat club had a contentious budget meeting. We had enough money for either a new set of sails or to upgrade our liability and property insurance policy. The members overwhelmingly wanted the new sails. It was tangible and exciting. I had to fight hard to convince them to spend the money on the insurance instead. It was a tough sell. But I explained that the insurance was an invisible shield that protected not just the new sails we wanted, but all the boats, the clubhouse, and the club itself. One uninsured accident could make us lose everything.
I stopped allowing non-members to participate in our activities and our liability became manageable.
The Open Door and the Open Risk
Our hiking club had a friendly “open door” policy, allowing non-members to join our hikes to see if they liked the club. Our insurance broker informed us this was a major problem. Our policy was priced based on the risks of a defined group of members who had signed our waiver. Allowing unknown, non-waivered guests on our hikes dramatically increased our risk and could even void our coverage. I made the unpopular decision to stop this practice. We lost a few potential members, but our liability became defined and manageable, and our insurance company was much happier.
The concept of “indemnification” of board members in your bylaws that nobody understands but changes everything.
The Promise to Protect
Our bylaws had a section on “indemnification” that nobody on the board understood. Our lawyer explained it to us in simple terms: it is a promise from the organization to its board members. It means that if a board member is sued personally for an action they took on behalf of the club, the organization will use its funds to pay for their legal defense. This promise, enshrined in the bylaws, is a critical protection. It works in tandem with D&O insurance and is one of the most important reasons why skilled professionals will agree to serve on a volunteer board.
This unpopular opinion on club social media pages will trigger members but it’s true from a libel and slander perspective.
The Post That Became a Problem
Your club’s private social media group feels like a safe space for members to vent. But from a legal perspective, it’s a liability minefield. If a member posts a false and damaging comment about another member or a local business, the club itself could be held liable for providing the platform for that libel. An unpopular but necessary policy is to have clear rules for online conduct and to actively moderate your page. A private group is not immune from the laws of defamation, and your club could be the one paying the price for a member’s angry post.
Stop copying the bylaws from another club. Your activities and risks are unique.
The Borrowed Rules That Didn’t Fit
When we started our flying club, we copied the bylaws from a local gardening club to save time. It was a disaster. Their rules were about flower shows and membership teas. Our risks were about aircraft maintenance, pilot qualifications, and FAA regulations. The borrowed bylaws were completely irrelevant to our actual operations and provided no guidance for our most critical risks. In a dispute, they were worse than useless. We learned that your governing documents must be a unique reflection of your organization’s specific purpose and activities. There are no shortcuts.
The mistake of ignoring your state’s non-profit filing requirements I see everywhere.
The Forgotten Paperwork
Many small clubs think that once they get their 501(c)(3) status from the IRS, they are done with paperwork forever. This is a critical mistake. Every state has its own, separate registration and annual reporting requirements for non-profits and charities operating within its borders. Ignoring these state-level filings can lead to financial penalties and even the loss of your right to operate or solicit donations in that state. Being a federal non-profit doesn’t mean you can ignore your state-level obligations. It’s a common and costly oversight.
Why this new “insurtech for clubs” isn’t innovative. It’s just a new front-end for the same old limited policies.
The Shiny App and the Rusty Policy
A new app-based “insurtech” company promised to revolutionize insurance for small clubs. Their website was beautiful, and getting a quote was easy. But when I dug into the actual policy they were selling, it wasn’t innovative at all. It was the same old, basic general liability policy with all the standard exclusions, just sold through a prettier interface. The technology was new, but the product was outdated and didn’t cover our club’s key risks. It wasn’t an innovation in coverage; it was an innovation in marketing a limited product.
The rule I break consistently (I advocate for buying more insurance than we legally need) and why you should too.
Insuring for the Lawsuit, Not the Minimum
Our state has a law that provides some liability protection for volunteers, but it’s limited. Many clubs see that law and decide they don’t need much insurance. I consistently break this rule of thumb. I advocate for our club to buy insurance limits that are far higher than any legal minimum. Why? Because the law might limit the final judgment, but it doesn’t stop someone from filing a massive lawsuit against you. You still need to pay for a lawyer to defend you, and legal bills can be huge. We insure for the cost of the fight, not just the outcome.
Stop believing your community spirit will protect you. Believe in a comprehensive insurance portfolio for your organization instead.
The Spirit Is Willing, But the Lawsuit Is Strong
Our organization was built on a powerful sense of community spirit. We were a family. We truly believed this bond would see us through any problem. Then a problem came that our spirit couldn’t fix: a major liability lawsuit. We were faced with legal fees and a potential judgment that our positive feelings couldn’t pay for. We learned that community spirit is essential for our mission, but it is not a risk management strategy. A comprehensive insurance portfolio—that is the tangible, practical expression of our commitment to protecting our community and ensuring its future.