Organizational Structure

D&O Insurance

Directors and Officers (D&O) liability insurance is an extension of all the other protection mechanisms for board members and the organization. The policy usually reimburses the organization for any indemnification expenses incurred and it provides direct payments to board members when the organization is not able to reimburse their personal court costs.

Once again, the policy won’t cover intentional wrongdoing.

It is important to scrutinize the details in the policy, identify what is omitted and excluded, and verify whether it:

  • lists all positions you want covered
  • defines which losses are covered
  • includes employment-related claims
  • covers attorneys’ fees
  • covers fines, penalties, punitive damages
  • pays costs on a claims-made-and-reported basis
  • reimburses expenses as they are incurred


No board should take a standard off-the-shelf policy. Too many omissions or vague terms might prove disappointing in case a claim must be filed. Discuss the details with your broker to include all the necessary clauses that might prove helpful for your board and organization.

Some board members take additional coverage from their own insurance carriers to protect themselves against possible losses of personal assets in case the board as a collective fails to deliver.

Additional references:

The Nonprofit Risk Management Center