Nonprofit Insurance
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Directors and officers insurance for nonprofit organizations

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Directors and officers insurance

Directors and officers insurance protects board members and officers against legal expenses if they are sued for a decision they made on behalf of the company that led to a financial loss.

D&O insurance protects your decision-makers

Your board of directors makes major decisions about how your nonprofit is run. The directors might establish a nonprofit’s goals and strategies, determine how funds are spent, and set salaries for employees. This means they need liability protection for their decisions – in fact, it’s likely they expect it.

Directors and officers (D&O) insurance can pay for lawsuits related to decisions made by your board of directors and by officers elected or appointed by the board. This policy is also called management liability insurance.

D&O insurance provides coverage related to:

  • Accusations of mismanaged funds
  • Failure to meet regulatory standards
  • Failure to perform official duties

What coverage can directors and officers insurance provide for nonprofits?

Accusations of mismanaged funds

If board members are accused of making a bad investment decision or misusing your nonprofit’s funds, they could be sued. Even if the lawsuit is without merit, attorney’s fees and court costs could significantly drain your company’s finances.

Failure to meet regulatory standards

If your animal shelter or charitable organization fails to meet regulatory standards, your board of directors could take the blame. A nonprofit organization’s D&O insurance can help pay for the cost of hiring an attorney and other legal expenses that result from a lack of compliance with industry standards or regulations.

Failure to perform official duties

Though directors and officers only have so much influence over the success of your company, when something goes wrong, the blame may fall squarely on their shoulders. If a board member is sued for failing to perform fiduciary duties or fulfill legal requirements, this policy can help pay for the cost of hiring a lawyer and other expenses.

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D&O insurance helps your nonprofit attract talent

By securing D&O insurance for your nonprofit, you’re signaling that your directors and officers are protected. That attracts top talent who might otherwise decline if they believed their personal assets were at risk.

Any business with a board of directors or advisory committee can benefit from D&O insurance. Talk to a licensed Insureon agent who specializes in nonprofit insurance policies to find out more.

How much does D&O insurance cost for nonprofits?

Human and social service professional calculating insurance costs for their business.

Most nonprofits pay a median of $70 per month for directors and officers (D&O) insurance, but you could pay more or less depending on your risks.

Insurance costs for nonprofit businesses are based on a few factors, including:

  • Nonprofit services offered, such as counseling or pet adoption
  • Business equipment and property
  • Revenue
  • Location
  • Number of employees

Other important policies for nonprofits

Directors and officers insurance offers liability protection for the individuals who help run your nonprofit, but it doesn’t provide coverage for all risks. Owners of small nonprofits should also consider:

General liability insurance: This policy can pay for expenses related to client injury and property damage, along with lawsuits over libel and slander.

Business owner's policy: A BOP bundles general liability insurance with commercial property insurance, often at a lower rate than if the policies were purchased separately.

Professional liability insurance: Also known as errors and omissions insurance, this policy can help cover legal expenses if a nonprofit is sued for unsatisfactory or negligent work.

Workers’ compensation insurance: This policy is required in almost every state for nonprofits that hire employees. It covers medical costs for work-related injuries and illnesses.

Employment practices liability insurance: If a nonprofit is sued by an employee over harassment, discrimination, or another violation of employee rights, EPLI can pay for legal costs.

Get free quotes and buy online with Insureon

Are you ready to safeguard your organization with directors and officers insurance? Complete Insureon’s easy online application today. Once you find the right policy, you can begin coverage in less than 24 hours.

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Updated: May 2, 2022
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