What Is Directors and Officers Liability Insurance?
Directors and Officers liability insurance — commonly called D&O insurance — protects the individual directors, officers, board members, and executives of an organization from personal financial liability arising from decisions they make in their management or leadership capacity. Without D&O coverage, the personal assets of board members and executives — their savings, their homes, their retirement accounts — can be at risk in a lawsuit arising from their governance or management decisions.
GLS Insurance provides D&O liability insurance for nonprofits, churches, private companies, and other organizations across all 17 states in our territory. D&O is one of the most important coverages we provide across our core client markets, and we take the time to explain what it covers, what it does not cover, and why it matters.
Who Needs Directors and Officers Insurance?
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Nonprofit Organizations — D&O is the single most important coverage for any nonprofit with a governing board. Without it, board members can be held personally liable for financial decisions, governance failures, and organizational direction. Many experienced community leaders will refuse to serve on a nonprofit board that does not carry D&O.
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Churches and Religious Organizations — Church boards, elder councils, and deacon bodies all face D&O exposure. Financial mismanagement, employment disputes, and governance disputes can all generate D&O claims.
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Private Companies — Private company executives and board members face D&O claims from investors, shareholders, lenders, employees, and competitors. Privately held companies often overlook D&O because they lack public shareholders, but their exposure is just as real.
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Educational Institutions — Private school boards and college boards of trustees face governance liability, employment decisions, and fiduciary responsibility claims that D&O addresses.
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Homeowners Associations — HOA board members make financial and governance decisions that affect all members and are frequently sued by dissatisfied residents.
What Does D&O Insurance Cover?
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Side A Coverage — Protects individual directors and officers directly when the organization cannot or will not indemnify them. Provides personal protection for the individuals named in a lawsuit.
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Side B Coverage — Reimburses the organization when it indemnifies its directors and officers for covered claims.
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Side C Coverage (Entity Coverage) — Protects the organization itself in certain types of securities-related claims. More relevant for larger private companies and public companies.
What D&O Does NOT Cover
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Fraud and Criminal Acts — D&O policies exclude claims arising from intentional fraud, criminal acts, or personal enrichment. Coverage is withdrawn if these are proven.
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Bodily Injury and Property Damage — Covered under general liability, not D&O.
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Employment-Related Claims — Some D&O policies include EPLI coverage; others do not. Many organizations need a separate EPLI policy alongside D&O.
Directors and Officers Liability FAQ
Can a nonprofit board member really be personally sued?
Yes, and it happens regularly. Board members can be named personally in lawsuits alleging financial mismanagement, breach of fiduciary duty, employment decisions, discrimination, and governance failures. Even if the board member wins the lawsuit, the legal defense costs alone can be financially devastating without D&O insurance. This is not a theoretical risk — it is a documented and growing area of litigation against nonprofit boards.
Does our general liability policy cover board members for governance decisions?
No. General liability covers bodily injury and property damage claims. It does not cover governance-related lawsuits against directors and officers. D&O is a completely separate coverage that must be purchased independently.
How much D&O coverage does a nonprofit need?
D&O limits for nonprofits commonly start at $1 million and range upward depending on the organization’s size, budget, and risk profile. Larger nonprofits with significant assets or complex programs may need $2–$5 million or more. GLS Insurance reviews your organization’s specific risk profile and recommends appropriate limits.
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