Directors and Officers Liability Insurance - A Must For Non-Profit Organizations

Many of us serve as volunteers on boards of non-profit organizations. If we do so we not only need to be respected for our service, but also protected from any potential law suits. 

Directors and officers of non-profit organizations who generously donate their time to advance the cause of an organization created to serve the public shouldn't have to be concerned about a lawsuit. 

However, at least 45 percent of non-profit organizations can expect to experience at least one directors and officers' liability claim during its existence.

The Necessity of D&O Insurance and What it Covers

Directors and officers liability insurance therefore, has become a necessity. This type of insurance protects board members from financial loss due to alleged wrongful acts, including conflict of interest; financial mismanagement; dissemination of false or misleading information; and negligence, including the failure to supervise the activities of others and evading responsibilities. Whether or not there is an actual liability, a lawsuit filed need to be defended and legal costs will accrue whether your organization wins or loses the suit.

Who Sues Non-Profit Organizations
A close look at who would be likely to sue the organization reveals that it is most likely to be one of the organizations' own employees with claims of sexual harassment, discrimination, wrongful termination, retaliation, invasion of privacy, failure to grant tenure, negligent evaluation, failure to employ or promote, wrongful discipline, deprivation of career opportunity, wrongful infliction of emotional distress, and mismanagement of employee benefit plans. 

In fact, among other potential plaintiffs such as benefactors, members, and clients, 80 percent or more of all claims against non-profit organizations are from the organization's own employees.

Directors and officers liability insurance has continued to evolve over the last 35 years from just covering officers and directors in the beginning to now covering acts by other personnel including trustees, employees, volunteers and the organization itself. 

What Does D & O Insurance Cover 
The coverage includes the cost of defense which can mitigate the risk of serious financial harm to the organization and its board members. Recent data indicates that the average cost to defend a claim is approximately $150,000, and the average settlement or damage award is approximately $375,000.

D&O Insurance - A Necessity in Today's Litigious Society
Once again an organization cannot afford to be without directors and officers liability insurance in these litigious times. A half million dollar law suit can easily wipe out most nonprofit organizations. Furthermore, for an organization to be fully protected it needs directors and officers liability insurance, general liability insurance which covers injuries and damages resulting from the organization's premises, products, and operations; workers compensation which covers a work-related sickness or injury; and a fidelity bond which protects the organization against financial embezzlement, forgery or theft.

Call (773) 614-3201 if you have any questions or interested in this coverage.

4 Most Popular Ways to Own a Home - the Pros and Cons

You will probably look at and consider many homes before you make an offer on one. 

But even before you begin house hunting, it helps to have in mind the type of home you want and the features that are most important to you. 

Here are the 4 Popular Ways to Own a Home and the Pros and Cons.:

THE TYPES OF HOME OWNERSHIP

1. Single family Ownership 
This is the most popular type of home ownership. As the owner of a single-family dwelling, you are totally responsible for paying the mortgage, property taxes, and any other carrying expenses, including all maintenance and repair costs.

2. Condominium Ownership
As the owner of a condominium, you own your living quarters (apartment, town home, or other unit) in the same way that a single-family homeowner does. You also own a share of the common space, such as gardens, parking areas, and community facilities (e.g., pool, recreation hall, tennis court). You pay a monthly maintenance fee for the common expenses. The owners' association, which you belong to makes decisions about how the condo is run.

3. Co-operative  Ownership
As the owner of a co-op, you buy a share or a number of shares in the corporation that owns and manages the building your apartment is in and the land it is on. If you took out a mortgage for the apartment, you are responsible for paying it off. You also pay a monthly maintenance fee for your part of co-op expenses, repairs, and taxes. You must, however, be approved by the co-op board before you can purchase.

4. Multi-family Ownership
This type of home has separate living quarters for two or more families to rent. The owner may be able to use rent from the other tenants to cover his or her own housing costs. These homes are often restricted to certain areas by zoning laws.

Condominiums and co-ops 
Depending upon the location, this type of home may be less expensive than single-family homes, although association fees can drive up the cost. They may also be safer and provide a variety of services and extra features that single-family homeowners often can't afford. However, you must obey the by-laws and rules of the association. Also, these dwellings generally do not appreciate in real estate value as quickly as single-family homes do.


Interested in home ownership, call for a free consultation, (773) 614-3201

5 Ways to Protect Your Family's Financial Independence

If you have a growing family, you probably realize that it has a way of outgrowing everything, especially their income and that there is a need for financial management.

While you are working towards achieving financial independence, think also about simultaneously implementing steps for protecting it. 

Having the right types of financial insurance and proper estate planning helps to relieve you of concerns associated with protecting your family's financial independence should a negative, unexpected event happens.

Consider these 5 financial management strategies for doing so:

1. Purchase long-term care insurance (LTCi) 

Long-term care Insurance is available to cover you if you acquire a chronic disease or disability and relieves your family of the burden of providing for your personal care. As I said in an previous post on long term care insurance, this type of policy covers the possibility of you not being able to perform at least two activities of daily living, without assistance, with the expectations that it will last at least 90 days. 

It includes a wide range of healthcare and social services such as day care, custodial care, home health care, hospice care, intermediate care, respite care, and skilled nursing care. LTCi does not cover hospital care.

2. Maintain appropriate levels of life, auto, home, and health insurance benefits.

Life insurance is one of the most important products you must consider obtaining in order to provide financial security for your loved ones. Auto accidents can cause financial and economic havoc to you and your family. Besides, in most states it's legally required. 

3. Homeowners insurance is especially a necessity for both homeowners and renters if you want to ensure that your possession are protected in case of a fire, theft, liability, or any other disaster. And, if you have ever been sick or injured, you know that it is important to have the right type of health insurance

4. Evaluate the need for an umbrella policy to help protect you from lawsuits. A serious personal liability lawsuit can reach catastrophic levels for the party defending the law suit as the judgment may potentially exceed the insurance policy liability limits. 

Once the liability limits are exhausted, the insured is often forced to pay a substantial amount out-of-pocket. Depending on your occupation and situation, you may require increased protection against catastrophic lawsuits.

5. Make sure your estate planning is up to date. The field of estate planning is a very complicated. It requires a focus on wills, taxes, law, and life insurance. 

Achieving and protecting your financial independence goes together. While it would be a shame for you to lose a substantial amount of of your money by gambling or taking a chance on risky stocks, it is equally a shame to have to pay out a substantial amount of money on a major hospital bill, for care in a nursing home, or through losing a court suit. After all you worked for it, why not keep it and pass it on.

I'll be delving into estate planning in a future post. 


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Medicare Annual Election Period is Over, But not for Everybody

If you meet certain requirements you can still 
make some changes in your healthcare coverage 
even after the Annual Enrollment Period (AEP) 
ended December 7th.

Here are 6 requirements for your eligibility:

1.     If you are duo eligible, that is, if you are eligible for both Medicare and Medicaid, you can make changes in your healthcare plan throughout the year.

2.     If you have a special need, specifically diabetes, you can also make changes throughout the year. 

3.     If you just you just turned 65 and became eligible for Medicare, you have a seven month (three months before your birthday, your birthday month, and three months after the birthday month) window to enroll in whatever Medicare Advantage plan or Part D Prescription plan you choose. 

4.     If you become eligible due to a disability.     

5.     If you move, you may change to a different plan than was offered in an area where you formerly lived.      

6.     And, if your coverage through your employer or union group health plan ends, you have a Special Election Period (SEP) to enroll in a Medicare Advantage Plan or a Part D Prescription plan. The SEP ends two months after your coverage through the group plan ends.

Still have questions about your health care plan? Still thinking about changing, call me at (773) 614-3201.

5 Rules to Follow if You Want Good Credit

There are the financial gurus or advisers on TV, radio, and in print that advise their followers to cut up all their credit cards and go on a cash only basis. 

These advisers often already have a great cash flow either from their book sales, their speaking engagements, their media gigs, their investments, or any combination of the above. Ironically, often they used credit to get to the point where they are and now they are advising all of us to stop using credit.

However, for most of us, carrying a few credit cards is the norm. Nevertheless, if you want to keep your already good credit or want to improve your credit even more, there are some things you should not do: 

1. Don't miss a payment and end up paying 30 days late. This results in an immediate negative impact on your credit score.

2. Don't resume paying a delinquent account if it is over two years old unless you are applying for a mortgage loan and the lender requires it to be paid off. Delinquent account over two years old have minimum impact on your credit score and if you start paying it again, the algorithms at the credit bureaus will treat it as if it was a recent entry. Please avoid doing this. Do not feel guilty that you didn't pay this obligation, it has been charged of as a bad debt by the creditor.

3. Don't accumulate more than five revolving credit cards (for example, Master Cards, VISA cards, and Discover cards) and always ignore the instant credit offers from retail stores giving you 10% off. They almost always have a higher interest rate and besides these stores accept Master and VISA cards anyway. They just want to make extra money off of you.

4. Don't allow your credit to exceed 30% of your credit limit. For example, you have a credit limit of $1000 your balance should not be more than $300. The larger the spread between your balance and your credit limit the better. If you can afford to pay off your balance each month prior to the due date on your statement, that would be even better.

5. And finally, don't close your credit cards that have these low balances and transfer these balances to new credit cards offering lower interest rates. That will result in you having fewer credit cards with higher balances thus impacting your credit score negatively. Instead, negotiate with your current creditors for a lower interest rate. You already have a good record with them and chances are they will not want to lose your business. 

Make these don'ts a habit and you will continue to maintain your good credit, and even see it improve.

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