Country Clubs at a Crossroads: Why Specialized D&O and EPL Coverage Is More Critical Than Ever

Inside the Liability Landscape: What Makes Country Clubs a Unique Insurance Challenge

In our latest blog, Nick Matsie, our Management Liability AVP and Nonprofit expert at Berkley Select, explores the unique risks faced by country clubs across the United States. From seasonal staffing challenges to volunteer-led governance, these sprawling campuses require specialized insurance solutions tailored to their operational realities.

Since our founding in 1992, Berkley Select has been a trusted provider of Nonprofit Directors & Officers (D&O) and Employment Practices Liability (EPL) coverage for country clubs. This niche segment is both nuanced and dynamic, demanding a customized approach to risk assessment. Today, we insure over 250 country clubs nationwide - a testament to our deep understanding and commitment to this space.

Q: What makes country clubs uniquely vulnerable to D&O and EPL exposures compared to other hospitality or service-based businesses?

A: Country clubs differ significantly from other hospitality or service-based businesses, particularly in their governance and staffing models. Most operate under a non-profit structure, with volunteer boards that may lack formal training in fiduciary responsibilities. This can lead to mismanagement, conflicts of interest, or failure to adhere to bylaws—issues that often surface in D&O claims. Membership decisions can also be contentious, with allegations of discrimination based on age, race, gender, or religion more common here than in other sectors.

Q: What key factors do underwriters look for when evaluating D&O and EPL risk in a country club?

A: From an EPL standpoint, the risks are compounded by a limited HR infrastructure. Many clubs run lean, with small administrative teams that struggle to maintain consistent documentation, training, and onboarding practices. Seasonal hiring and high turnover are particularly problematic. Temporary staff often receive minimal orientation, and inconsistent training can result in uneven enforcement of workplace policies. Moreover, the lack of formal performance reviews or termination documentation can severely weaken a club’s defense in the event of an EPL claim.

When evaluating EPL risks, underwriters look closely at several key factors:

• Claims history: Prior incidents involving harassment, retaliation, or wage and hour violations are immediate red flags.

• Board composition and governance practices: In addition, we pay attention to diversity, training, and adherence to bylaws.

• Financial stability: This is another critical area; audited financials help us gauge a club’s ability to indemnify its directors.

• HR policies: Policies are scrutinized for clarity and consistency, including written procedures on harassment and discrimination, documentation of training and disciplinary actions, and the use of third-party HR support or legal counsel.

• Turnover rates and seasonal staffing patterns: High turnover without structured onboarding significantly increases EPL exposure.

Q: What are some best practices that country clubs should implement to reduce D&O and EPL risks?

A: To mitigate risk, club leadership and risk managers should prioritize governance, education and HR best practices. Board members should be trained on fiduciary duties and conflicts of interest, while HR teams must implement consistent onboarding and training protocols for all staff, including seasonal hires.

Recommended Best Practices include:

• Detailed documentation of performance issues and terminations

• Use of employee handbooks with signed acknowledgments

• Establishing anonymous reporting channels for misconduct

• Timely investigation and resolution of complaints

• Regular review of policy limits, exclusions, and endorsements, including separate limits for D&O and EPL claims

Q: What are some common D&O and EPL claims you have seen in country clubs — and are there any emerging trends?

A: The most common EPL claims we encounter in country clubs involve:

• Harassment

• Discrimination

• Retaliation

• Wrongful termination

• Wage and hour violations—particularly among seasonal staff.

D&O claims often stem from mismanagement of funds, breaches of fiduciary duty, and membership discrimination. In recent years, we’ve seen emerging trends that add new layers of complexity.

Litigation related to diversity, equity, and inclusion (DEI) initiatives are on the rise, and directors are increasingly being held accountable for cyber governance failures and data breaches. Additionally, government scrutiny around the misuse of Paycheck Protection Program, (or PPP loans), has led to enforcement actions that impact coverage.

Q: Are there any coverage enhancements or endorsements that are particularly valuable for country clubs?

A: Coverage enhancements that are especially valuable in this sector include:

• Third-party EPL coverage for claims from members, vendors, and guests

• Wage and hour defense sub limits for legal costs related to FLSA violations

• Crisis management support for reputational damage following a claim

• Immigration violation defense coverage for clubs employing H2B visa workers

• Endorsements for data breach and identity theft protection

• D&O coverage definitions that include volunteers

Q: Looking ahead, how do you see D&O/EPL risks evolving for country clubs in light of changing workplace norms and member expectations?

A: EPL risks for country clubs are likely to increase for the following reasons:

• Economic pressures such as funding freezes and inflation may lead to future layoffs, further increasing the frequency of claims. 

• Social inflation is driving up jury awards and settlements, while regulatory agencies like the EEOC are focusing more on AI, DEI, and wage transparency. 

• Board members face growing exposure related to cyber risk, and governance failures.

Clubs that invest in strong governance, robust HR practices, and comprehensive insurance solutions will be best positioned to protect their organizations and their people.

In today’s unpredictable environment, D&O and EPL insurance are no longer optional. They are essential tools for protecting country clubs, their leadership, and their members. Reach out to learn how we can help your clients protect their clubs.

Disclaimer:

Berkley Select is a member company of W. R. Berkley Corporation, a Fortune 500 Company. The views expressed here are those of the author and do not necessarily represent the views of Berkley Select or W. R. Berkley Corporation. Not all products and services are available in every jurisdiction, and the precise coverage afforded by any insurer is subject to the actual terms and conditions of the policies as issued.