To excel in today's competitive environment, boards must be willing to make bold decisions. However, bold decisions can be risky, particularly for directors worried about protecting their personal assets. Directors should feel comfortable being decisive without the threat of litigation hanging over their heads.

Most credit unions offer group liability insurance to their directors and officers to protect them from civil liabilities. In addition, many credit unions have indemnification provisions in their policies. These are good tools. Unfortunately, under certain situations, these practices may not be enough.

When directors and officers are no longer in office, group liability insurance and indemnifications policies may fail to protect them. Under a change-of-control situation, the liability insurance may be cancelled for outgoing directors. A change of control can occur with a merger, regulatory action or removal of the directors by the members. This is important because in many states, a director's liability for decisions could extend up to a statute of limitations.