Now let’s have a discussion about the difference and importance of both indemnification and director and officers insurance.
Indemnification - most if not all organizations indemnify their board of directors for any financial liability for serving on the board. The indemnification clause usually is stated in the bylaws.
It also goes without saying that the board member will be indemnified as long as he or she did not do anything illegal or acted in bad faith.
Check your bylaws to see if your chamber board members are indemnified.
Director and Officers Insurance - most know this as D&O insurance which protects your board members from any lawsuits concerning legal activities. And it is common knowledge that these claims and lawsuits are generally employee based.
And as stated in The Perfect Board book on page 80, these types of claims or lawsuits can be wrongful termination, sexual harassment, copyright/trademark infringements to name a few.
The bottom line, make sure you have the indemnification clause in your bylaws and you are providing (any paying) for D&O insurance.
For a legal resource go HERE.
