And while they may be right, they could be preventing some good from happening, also. While many states instill a heavy burden on plaintiffs to establish liability when seeking to bring claims against nonprofit board members, the board members still would be liable for their own legal fees in defending the action. The insurance would pay for those costs. The policies, however, usually contain a number of exclusions. For example, they generally do not cover fraudulent or dishonest acts, activities that generate profits or remuneration for the officer or director, or activities taken outside the role of officer or director, according to Schack.
Nonprofit groups are no exception.