American Church Group - Colorado

Why Your Directors and Officers Care About Insurance

Think about your ministry’s board members and administrators: the work they do is important to your organization, and they are often volunteers with other full-time jobs. Did you know these board members could face personal liability and financial damages as a results of unjust leadership actions?

Sometimes ministry directors find themselves in situations where they have failed to maintain adequate financial records or exceeded the authority granted by the church’s bylaws.  Circumstances like these make it important to consider Directors and Officers liability coverage (D&O) to protect your organization’s board members, administrators, trustees, directors, and officers. 

What is D&O coverage?

D&O coverage helps protect the personal assets of your ministry’s leaders in the event that they or your ministry become obligated to pay financial damages as the result of wrongful leadership decisions or activities. Depending on the insurance provider, this coverage also includes a limited amount of defense funds for your ministry to use to mount a defense in the event you are sued. Some policies include spouses of ministry leaders when they are engaged in ministry activities.

Who is a director or officer?

Insurance policies usually define a director or officer as a leader, specifically serving as a board member, administrator, director, officer, or trustee, and acting within the scope of the leadership authority granted by the bylaws of an organization.

When do you need D&O coverage?

This coverage protects directors and officers when they are held personally liable for financial damages that result from their actions as board members. These damages must result from the failure of leaders to perform their duties in a proper way.

Why do you need D&O coverage?

D&O provides defense funds to refute a claim or to prove immunity under the law. Even if your state has legislation protecting nonprofit directors and officers from lawsuits, you still may need D&O insurance. In some cases, the statutes specify activities for which immunity is intended, but they typically don’t protect the organization. With D&O coverage, the organization is protected in relation to covered financial damage claims.

Individuals in directors and officers positions are a vital part of any ministry. They need to be protected in unforeseen circumstances, making it especially important to consider the benefits of D&O liability coverage. Other aspects of your ministry are protected by insurance, why shouldn’t directors and officers be protected, too?