Here are two scenarios of how a Directors & Officers insurance policy would respond to protect a Chamber of Commerce.
The disgruntled member
The Chamber of Commerce’s board of directors makes a decision to allocate funds to a charity, without realizing that the charity is not local. One of the chamber’s members hears about it, and sues the board for misuse of funds for operating outside of their charter. The Directors & Officers Liability insurance policy would respond to cover the legal expenses of the board, as well as any award or settlement.
The publishing problem
The Board of Trade decided to run a monthly newsletter that was distributed to the community. As part of the added value, the board sold adds in the publication at a discount to local merchants. A new clothing store opened and put in a last minute request for an ad in the publication. But when the next issue came out, the store’s ad was missing.
The board member who was supposed to process the request had forgotten, though the chamber kept the fee. The store responded by suing the Board of Trade for breach of fiduciary duty and breach of contract.
The Board of Trade’s D&O liability insurance policy responded to cover the legal expenses incurred in defending the case, and the resulting award or settlement.