With large numbers of Baby Boomers now retiring, many may want to give back to their community and stay active by serving as a volunteer board member of a local charity. They may not realize, however, that their commendable behavior exposes them to the risk of being sued. Board members can be held personally liable for the actions or inactions of the charitable organization, even if the board member is unpaid. In an ACE survey of households with at least $5 million in investable assets, 44 percent of those who were serving or had served as a volunteer board member did not have proper coverage in place.

Considering the increased need to protect assets when entering retirement, wealth advisors have an opportunity to strengthen their client relationships and broaden their range of advice by discussing this liability risk with their clients and then suggesting a quick review of their coverage by an insurance agent.  

Just what can clients be sued for? Most often, lawsuits arise out of wrongful employment practices, such as sexual harassment, discrimination and wrongful termination. Although a board member may not have been the one who carried out these actions, individuals on the board can still be held accountable for not having the proper training programs in place to prevent such actions, or for not having a complaint process to address a problem in its earliest stages.