Nonprofit D&O Insurance: A Guide for Board Members
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Nonprofit directors and officers (D&O) insurance can help pay defense costs, settlements and judgments for covered allegations about how a nonprofit is governed. It can protect insured leaders and, depending on the policy, the organization. It does not make every board decision or lawsuit covered. [1]
For a board, the useful question is: who would pay for a defense if someone challenged a leadership decision?
What does nonprofit D&O insurance address?
D&O focuses on allegations involving leadership duties, such as misleading statements, breaches of duty or misuse of authority. Claims can come from donors, employees, vendors or other parties. An allegation is not proof that anyone did something wrong. [1]
Before joining a board or renewing coverage, ask for the policy and endorsements, not only a certificate. Check which people, entities and activities are insured.
How is D&O different from other nonprofit insurance?
The name of the person being sued does not, by itself, identify the right policy. The allegation matters.
| Question | Coverage to discuss |
|---|---|
| Is a leadership decision or alleged breach of duty being challenged? | Directors and officers liability |
| Was someone injured at an event, or was their property damaged? | General liability |
| Is an employee alleging wrongful termination or discrimination? | Employment practices liability; confirm whether it is included or separate |
| Did advice or a professional service allegedly cause a loss? | Professional liability |
| Is money missing because of theft or embezzlement? | Crime coverage |
These are starting points for a policy review, not coverage determinations. NAIC distinguishes general liability, employment practices, professional liability and crime coverage; they are not interchangeable. [2]
For the wider program, see nonprofit insurance. Volunteer injury and transportation questions have separate guides: volunteer accident versus liability and volunteer driver insurance.
What should a board check in the policy?
Ask the broker to identify the relevant wording for each answer:
- Who is insured? Check the organization and current, former and future board members, plus any employees, volunteers or committees that need protection.
- What reduces the limit? Ask whether defense expenses use up the amount available to pay a settlement or judgment.
- When must a claim be made and reported? Check the policy dates, reporting conditions and treatment of previously known matters.
- What is excluded? Review exclusions and their exceptions, including conduct, prior disputes and bodily injury or property damage.
- What happens when coverage changes? Ask about continuity and any extended reporting option before switching insurers or ending operations.
For example, Travelers' published nonprofit specimen is claims-made, includes defense expenses within its limit and defines insured people beyond directors alone. That is one specimen, not a description of every policy or a promise about terms NRG can obtain. [3]
Does the nonprofit's promise to protect directors replace insurance?
An organization's obligation to reimburse a director and an insurer's obligation under a policy are different questions.
For Washington nonprofit corporations, RCW 24.03A.630 applies specified corporate indemnification provisions with nonprofit-specific adjustments. Ask counsel to explain the organization's bylaws and legal obligations, and ask the broker how the proposed policy responds alongside them. Do not treat a bylaw provision as confirmation that an insurer will pay. [4]
This Washington reference does not establish the rules in Idaho, Oregon or Arizona. Organizations operating across states should review the applicable rules with counsel.
What should we prepare for a D&O quote?
Start a board review folder with:
- The legal entity name, mission, programs and any related organizations.
- Current financial statements and the operating budget.
- A description of board governance and staff or volunteer responsibilities.
- Existing insurance, renewal dates and any required limits.
- Accurate information about prior claims, disputes and known circumstances requested in the application.
The insurer's actual application determines what must be supplied. Travelers publishes separate nonprofit applications; use the form for the proposed coverage rather than assuming every insurer asks the same questions. [5]
Discuss your nonprofit's coverage
Use NRG's nonprofit insurance page to review the broader coverage questions, or request a conversation about your organization and its renewal. An inquiry does not bind insurance.
Sources and scope
Sources accessed November 4, 2026. Insurer materials illustrate that insurer's product or application; they do not establish universal policy terms or NRG's access to that insurer.
[1] Travelers, nonprofit directors and officers liability insurance.
[2] NAIC, Small Business Insurance, sections on general liability and other liability coverages.
[3] Travelers, nonprofit D&O specimen NDO-3001, edition 01-09. Published specimen accessed through the insurer's current forms directory; not a current quote or a state-specific promise of coverage.
[4] Washington Legislature, RCW 24.03A.630.
[5] Travelers, directors and officers applications and forms, nonprofit organizations section.
General information, not legal advice or a coverage determination. Policy wording, exclusions, limits, underwriting and applicable law control.
Frequently asked questions
- Size and unpaid service alone do not answer the question. Review the decisions the board makes, potential allegations, existing protection and the organization's ability to fund a defense. Nonprofit D&O can be relevant to organizations of different sizes. [1]
- Check the proposal. Ask whether employment practices coverage is included, separately purchased, or excluded, and whether any included coverage shares the D&O limit. A D&O label is not enough to confirm the answer. [2][3]
- Compare proposed limits and retentions against the organization's circumstances and the policy's defense-cost treatment. Ask what the nonprofit would have to pay itself. This guide does not prescribe one limit or price for every board.