Church Directors and Officers Insurance: Protecting Your Church Leadership
Church board members, trustees, and officers make decisions every week that shape your congregation’s future. Hiring staff, approving budgets, managing property—these decisions carry real risk. When something goes wrong, leaders can be held personally liable.
Directors and officers (D&O) insurance protects the people who serve your church in leadership roles. Without it, a lawsuit could put their personal assets—homes, savings, retirement accounts—at risk.
What Does Church D&O Insurance Cover?
Directors and officers insurance covers claims alleging wrongful acts in the course of leadership duties. This includes:
Employment-related claims — wrongful termination, discrimination, harassment allegations against board members who made hiring or firing decisions
Financial mismanagement claims — allegations that leaders mishandled church funds, made poor investment decisions, or failed in their fiduciary duties
Breach of duty claims — accusations that board members failed to act in the church’s best interest or violated their responsibilities
Regulatory violations — claims related to failure to comply with state nonprofit regulations or IRS requirements
D&O insurance pays for legal defense costs even if allegations are groundless. Defense costs alone can reach tens of thousands of dollars—money that would otherwise come from the church budget or leaders’ own pockets.
Why Churches Need D&O Coverage
Many church leaders assume general liability insurance covers everything. It doesn’t. General liability covers bodily injury and property damage claims. It won’t respond when a terminated employee sues the board for wrongful termination or when a donor alleges financial mismanagement.
We regularly see churches surprised by this gap. A worship leader termination leads to a lawsuit naming every board member who voted. A building project goes over budget and a disgruntled congregant sues the trustees. These scenarios happen more often than most churches realize.
The personal liability risk is real. In most states, nonprofit board members can be held personally liable for decisions made in their volunteer roles. Church leaders often serve without compensation—losing their home over a volunteer position is a devastating outcome that proper insurance prevents.
What D&O Insurance Costs
For most churches, D&O coverage costs between $500 and $2,500 annually, depending on church size and budget, number of employees, coverage limits selected, and claims history.
Given that a single employment lawsuit can easily exceed $50,000 in defense costs alone, this coverage pays for itself with one avoided claim.
Coverage Limits to Consider
We typically recommend minimum coverage of $500,000 for smaller churches and $1 million or more for churches with multiple staff members, annual budgets over $500,000, schools, daycares, or other ministries, active building or capital campaigns, or a history of leadership transitions.
Higher-risk activities mean higher exposure. A church running a preschool with 15 employees faces different risks than a small congregation with a part-time pastor.
What D&O Insurance Won’t Cover
Understanding exclusions helps set realistic expectations. Criminal acts and intentional illegal conduct aren’t covered. Claims arising from a leader gaining improper personal benefit are excluded. Situations the board knew about before the policy started won’t be covered. Bodily injury and property damage belong under general liability, not D&O. And counseling malpractice needs separate coverage.
Getting the Right Policy
When shopping for church D&O insurance, look for defense outside limits so legal defense costs don’t reduce your coverage amount. Make sure the policy has a broad definition of insured that covers all board members, officers, trustees, committee members, and employees acting in supervisory roles. Check for employment practices coverage—some D&O policies include this while others require separate coverage. Past acts coverage protects against claims for decisions made before the policy began. And look for nonprofit specific forms since generic D&O policies may not address church-specific exposures.
Next Steps
If your church doesn’t have D&O insurance—or you’re unsure what your current policy covers—now is the time to check. Pull out your policy declarations page and look for “Directors and Officers” or “Management Liability” coverage.
Not sure what you’re looking at? We help churches across the country understand their coverage and fill gaps. Call us at 978.712.0111 for a free policy review.
Hale Street Insurance specializes in church and nonprofit insurance. We work with congregations of all sizes to build comprehensive protection for their ministries.
