Serving on a church or nonprofit board is, for most people, a volunteer act of service — but it also carries real personal legal exposure that many board members don’t fully appreciate until they’re already facing a claim. Directors and officers (D&O) insurance exists specifically to protect the personal assets of board members, officers, and sometimes staff, against claims arising from decisions made in their governance role.

D&O claims don’t usually look like the dramatic lawsuits people picture. Far more often, they involve things like a disgruntled former employee alleging wrongful termination, a dispute over how a bequest or restricted donation was used, a disagreement between board factions that ends up in court, or a claim that the board breached its fiduciary duty in how it handled a financial decision. These are exactly the kinds of situations that arise in ordinary nonprofit governance, not exotic scenarios.

One of the most persistent myths is that “we’re a small nonprofit, nobody’s going to sue us.” Board members and executives can be named personally in a lawsuit regardless of the organization’s size or budget, and legal defense costs alone — even for a claim that’s ultimately unsuccessful — can be substantial enough to be genuinely painful for an all-volunteer board to absorb without insurance.

D&O coverage is also something boards should revisit periodically, not just purchase once and forget. Coverage limits that made sense for a small congregation years ago may not reflect the organization’s current budget, staff size, or activities. It’s worth a standing item at an annual board meeting to confirm the policy is still in force, still adequate, and that current board members are aware it exists and roughly what it covers.

Action Items

• Confirm your D&O policy is currently active and get the coverage limit in writing.
• Add a standing “insurance review” item to your annual board meeting agenda.
• Brief incoming board members on what D&O covers as part of onboarding.

This post is for general informational purposes only and isn’t legal or insurance advice — every policy and organization is different, so please talk with a licensed insurance professional (and your attorney, for governance and fiduciary questions) before making coverage decisions for your board.