Associations and foundations

A special basic BTA policy has been developed for associations and foundations with a balance sheet total of up to €2,500,000. As a director of an association or foundation, you can be held privately liable for the financial consequences of mistakes made by the board. Even if the claim is not assigned, it can involve defense costs. In addition, you can also be held personally liable if you perform board duties at the association or foundation without compensation.

To protect against this, you can easily purchase directors' liability insurance. The special policy is designed for:

- associations and foundations in existence for more than 1 year
- associations and foundations with equity greater than 5% of the balance sheet total

- associations or foundations with losses twice in the last two years
- Associations or foundations liable to corporate tax
- Owners associations see separate insurance for this
- Soccer associations
- Informal associations without notarized statutes
- Financial institutions and (pension) funds
- Support funds, foundation administration offices and Foundations Preference Shares

Associations and foundations: insure directors' liability or not?

In practice, a board member can be sued from inside or outside the association. Here are a few examples:

Replacement of clubhouse

The clubhouse of a sports club is in need of renovation. A local contractor is asked by the chairman to completely rebuild the clubhouse. The plans are carried out and the contractor incurs substantial costs and forgoes other assignments for this purpose. Unfortunately, the sports club does not have enough money to pay for everything and cannot fulfil the contract. As a result, the contractor suffers considerable damage and sues the chairman and other board members in their private assets.

Constructing new fields

A club has new pitches built cheaply by a non-specialist contractor. Before the competitions, the pitches are rejected completely and must be replaced. The contractor has since been declared bankrupt and the club has incurred double the costs. The members of the association can call the board to account.

A foundation organises a large music festival and is confronted with a very disappointing number of visitors. Due to the low number of visitors, there is a large deficit in the budget and the foundation goes bankrupt. The board members of the foundation are held liable by the creditors.

For many associations and foundations, it is a wise idea to take out directors' and officers' liability insurance. The risks that a director of an association or foundation runs are considerable and can be covered by taking out an insurance policy.