Directors And Officers Insurance For Churches
Your church board members — the elders, trustees, and officers who volunteer their time to lead your congregation — put their personal assets on the line every time they make a leadership decision. Directors and officers insurance for churches (D&O insurance) protects those individuals from personal financial loss when they face claims of actual or alleged wrongful acts in their governance role. As an independent church insurance broker licensed to serve congregations across the United States, Integrity Now Insurance Brokers shops multiple specialty church insurance carriers to find your board the right D&O protection at a competitive rate.
In addition, it provides additional protection to their spouses, in the event they are personally sued. Lawsuit can come from any number of parties to include an employee, vendors, competitors, investors, customers, or other church members, for actual or alleged wrongful acts in managing the church organization.
D&O insurance, also extends coverage to the church organization as well. The insurance protects the church for legal fees, settlements, and other costs associated with a claim.
Most board members, especially those who have been involved in a prior claim will want to ensure they are protected from both indemnification and a church D&O insurance policy.
The good news is your D&O insurance policy includes language that provides financial backing for your churches standard indemnification provision. The provision found within the D&O policy, holds officers harmless for losses due to their role in the company.
A church Elder Board who are considered to be the churches Directors and officers, can be sued for a variety of reasons related to their church’s roles and responsibilities, including:
- Breach of fiduciary duty resulting in financial losses or bankruptcy of your church organization
- Misrepresentation of church assets
- Misuse of church funds
- Fraud
- Lack of corporate governance
As with any insurance policy, Illegal acts or illegal profits are generally not covered under a church D&O insurance policy.
Is Directors And Officers Insurance For Churches Needed?
It’s a common misconception that D&O claims are rare within a church. For the most part we would agree with this assessment. This is evident in the low annual premiums, church property insurance companies charge for this coverage for the average church. For a typical small or average size church, D&O insurance only cost a few hundred dollars per year.
As your church insurance brokers, it is our job to help you identify all your liabilities your church could face in the future. This includes both small and medium size risks. We have partnered with church insurance companies that have been specializing in church insurance for over a half century. These church insurance companies provide competitive pricing for their directors and officers insurance for churches.
Churches of all sizes who have a corporate board or should consider including a church D&O insurance policy. We have found that church members will not agree to be nominated as an Elder of the church, unless there is a D&O policy in place. They risk losing a lot for their volunteer service. Making sure your church has a D&O insurance policy in place, is the least you can do for your board member.
Directors and Officers Insurance for Churches Claim Example
While we never want to think a church member would sue one of our trusted elders or even the entire elder board, this can and does happen. Following is a claims example that occurred in 2008.
During a church business meeting, one of the items being discussed was their churches group health insurance monthly cost. During 2008 our economy was in bad shape, as a result churches were struggling.
A long standing member of the church raised their hand and voiced their opinion on why the elder board agreed to such an expense health insurance plan. They were very upset as the church member believed they had purchased a health plan that was far too expensive.
They stated the elder board was misusing the churches funds by selecting the plan they did, especially during a time of economic difficulties. The church member was not happy his offering was being wasted on what he believed was a very lavish health insurance plan.
As mentioned above directors and officers insurance for churches, covers your board member for both “actual or alleged wrongful acts”.
In this case the church member was incorrect in their assumptions, as the church had obtained the cheapest available plan in the health insurance market.
The church member was out of touch on the true cost of health insurance, as they were a union employee and paid almost no monthly insurance premium.
Something as simple as group health insurance, could have spelled disaster for the churches board members. Had this individual pressed the issue further, they could have filed a lawsuit. Thankfully this did not turn into a lawsuit, and he was satisfied with the response from the board members of the church.
Understanding Side A, B, and C of Your Church D&O Insurance Policy
Most church D&O insurance policies are structured in three parts:
Side A — Individual Coverage: Covers board members personally when the church cannot or will not indemnify them — for example, if the church is insolvent or if a conflict of interest exists between the board member and the organization. This is the most critical protection for your elders and trustees personally.
Side B — Entity Reimbursement: Reimburses the church itself when it steps in to indemnify a board member out of church funds. This protects your congregation’s assets from being depleted by defense costs on behalf of an individual leader.
Side C — Entity Coverage: Covers the church organization as a named defendant in a D&O claim. This is essential for churches with significant assets or real property, as it protects the organization directly — not just its individual leaders.
Many basic church package policies include only Side A and Side B. If your church has significant assets, we recommend verifying that your policy includes Side C entity coverage. As an independent broker, we review your specific policy language to confirm you have the right structure for your ministry’s needs.
D&O Insurance vs. Employment Practices Liability (EPLI): What's the Difference?
Churches frequently confuse directors and officers insurance with employment practices liability insurance (EPLI). They cover different exposures, and most churches with paid staff need both:
Directors & Officers (D&O) covers claims arising from governance and management decisions — financial mismanagement, breach of fiduciary duty, misuse of church funds, or failure of corporate governance. These claims typically come from church members, donors, vendors, or other stakeholders who believe the board acted improperly.
Employment Practices Liability (EPLI) covers claims from employment decisions — wrongful termination, discrimination, harassment, or retaliation. These claims typically come from current or former employees.
Example: If a church member sues the elder board for misusing the building fund, that is a D&O claim. If a former staff member sues for wrongful termination, that is an EPLI claim.
As your independent church insurance broker, we can package both D&O and EPLI together — often with the same specialty church carrier — to maximize your board’s protection and minimize your total premium.
What does Directors and Officers Insurance for Churches Not Cover?
We understand that you don’t have time to read your church insurance policies. Below are common exclusions you can expect to find in your Directors and Officers insurance for churches:
- Fraud and criminal offenses. A church board member will not be covered if they steal money from the church or commit other criminal acts.
- Pending and prior litigation started before you obtain your D&O insurance coverage.
- Bodily injury/property damage. Customer injuries or property damage would typically fall under a churches general liability insurance policy.
- Insured-versus-insured claims. One director or officer suing another is not covered.
- Employee Retirement Income Security Act claims. Claims of mismanagement of employee benefit plans would typically be covered by fiduciary liability insurance.
How Much Does Directors and Officers Insurance for Churches Cost?
The cost for Directors and Officers Insurance for Churches can range from a few hundred dollars a year to thousands of dollars.
The more assets your church has will increase the cost associated with D&O Insurance.
Another factor dealing with the cost of D&O Insurance is how you purchase the coverage. A D&O insurance policy purchased on a standalone basis will cost more than a policy obtained as a package policy.
When your church is insured with an insurance company that specializes in churches, these companies will typically offer a package policy.
Your D&O Insurance policy will also include a deductible that is separate from the church liability and property policy deductible. These deductibles range from $1,000 to $5,000.
Frequently Asked Questions: Directors & Officers Insurance for Churches
Who is covered under directors and officers insurance for a church?
D&O insurance typically covers all individuals serving in a governance capacity — elders, trustees, board members, officers, and their spouses. Many policies also extend to committee members who assist in governance functions. Review your specific policy declarations page to confirm who is listed as an insured.
Does D&O insurance cover the church’s pastor?
Yes, if the pastor serves in a formal board or officer role such as Executive Director, Elder, or Trustee. If the pastor is solely an employee without a governance role, employment-related claims would typically fall under Employment Practices Liability Insurance (EPLI) rather than D&O.
Is directors and officers insurance required for churches?
It is not legally required. However, many qualified volunteers refuse to serve on a church board without it — because they are personally exposed to lawsuits that could reach their home, savings, and other personal assets. Having D&O insurance in place is a basic governance best practice for any church with a board.
Does church D&O insurance cover volunteer committee members?
Many church D&O policies extend coverage to committee members and volunteers who assist in governance functions, but this varies by carrier and policy form. We review the “Definition of Insured” section of your policy to make sure every person doing board-level work is properly covered.
What is the typical deductible for church D&O insurance?
Church D&O deductibles typically range from $1,000 to $5,000, and this deductible is separate from your property and liability policy deductible. For small churches purchasing D&O as part of a church package policy, deductibles at the lower end of this range are most common.
We are here to Help as your Church Insurance Agency
Integrity Now Insurance Brokers specializes in insurance for churches. One of our church insurance agents are here to help you navigate all of the needed coverages your church should have in place. Directors and officers insurance for churches is just one of many different coverages you will need to have in place.
As your church continues to grow and prosper, we are here to provide additional recommendations when it comes to adding additional ministry insurance coverages or increasing existing church insurance limits.
We provide religious institutions and non-profit organizations with insurance policies that cater to their specific needs. Some of the coverages we help your church with includes general liability insurance, workers’ compensation insurance, business auto insurance, EPLI, and more.
If you are running a church in California, Ohio, Nevada, Washington, Colorado, Arizona, or Texas, Integrity Now Insurance is at your disposal. Our competent church insurance agents are determined to help churches across the US to find church property insurance companies that caters to their special needs. Call us for more information.
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