Directors and Officers Liability Insurance is commonly referred to as D&O insurance. This very specific type of liability insurance can be a great and almost necessary option for your nonprofit organization.

Your organization needs to protect its directors and officers who, by serving your organization, increase their risk for personal exposure to liability claims. The cost to defend a nonprofit on average can range from $35,000 and $100,000 just in legal costs! That does not begin to cover the costs of settlements or judgments.

Here are the 7 reasons why your nonprofit needs directors and officers liability insurance.


1.     Directors and officers insurance offers coverage for board members against any claims made against them during their time serving on a nonprofit organization’s board.


2.       The directors and officers insurance is put into place to protect individual board members from personal losses while serving as a director or officer of the nonprofit organization.


3.       The claims covered under this insurance are those that result from management decisions that result in financial consequences.


4.       Coverage often includes: defense costs, settlements, and judgments from lawsuits and wrongful act allegations. Be sure to check your policy form as they all vary.


5.       Directors and officers insurance covers monetary damages and does not cover bodily injury cases or property damage.  Many plans also exclude fraud and other criminal activity.


6.       Directors and officers insurance covers things not covered under your general liability insurance coverage plan. It is a common misperception that general liability coverage and umbrella policies fully cover the exposure of most directors and officers.


7.       Ask if it is written on a claims-made basis. Claims-made policies mean that the policy in force at the time a claim against you is made will pay for losses, regardless of when they occurred in the past, based on your proposed retroactive date.


Now you can see why your nonprofit organization needs directors and officers liability insurance.  Directors and officers liability insurance can come in different forms depending on the type of the nonprofit organization and the liability that the nonprofit faces, so it’s best to seek out an insurance agent and company with experience in this specialized coverage.


Sandi Purinton is your local expert at The Insurance Connection. Offering the benefits of an independent agency, The Insurance Connection carefully considers your individual insurance needs and finds the right coverage for the best price for you, all with a smile. Contact us today at 678-439-8757 or to get free insurance quotes


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This material is for information only and is not intended to provide legal or professional advice. You are encouraged to consult with your own attorney or other expert consultants for a professional opinion specific to your situation. This information is only a general description of the available coverages and is not a contract. In an effort to keep your policy coverage affordable, the actual policy contains certain limitations and exclusions. Please refer to your insurance policy for the pertinent contract language and coverages. Some coverages and discounts are not available in all states. The Insurance Connection welcomes all applications, without regard to religion, race, color, national origin, sex, handicap or familial status.