If you serve on a nonprofit board, you already know the work comes with passion, responsibility, and more than a little pressure. What many board members don’t realize, though, is that their personal decisions can sometimes land them in legal hot water — even when they’re doing their very best. That’s where Directors & Officers (D&O) insurance comes in. It’s part of management liability insurance, and it’s designed to protect leaders from the real risks of leading.

Think of D&O Insurance as protection for leaders (Directors, officers, managers and supervisors) who are simply trying to do their jobs and their personal assets for the potential liability they assume in their roles in a company . It covers wrongful acts — which sounds dramatic, but really just means:

• Errors or mistakes

• Breaches of duty

• Neglect or omissions

• Misstatements or misleading statements

Side A, B, and C

Insurance people love their alphabet soup, so here’s the plain-English version:

• Side A: Protects you personally if the nonprofit can’t indemnify you (say the organization goes bankrupt).

• Side B: Reimburses the organization when it does indemnify you — they pay your legal costs, then get paid back.

• Side C: Covers the organization itself when it’s sued alongside directors and officers.

Why Every Board Needs D&O

No matter how big or small your nonprofit, you absolutely need D&O insurance. Decisions are often made in split seconds, and while leaders always bring their A game , mistakes are bound to happen. Lawsuits don’t just target Fortune 500 companies — nonprofits and small organizations face them too.

D&O is essential because it protects directors and officers from the personal risk that comes with their role. Without it, a simple allegation could mean draining personal savings just to defend yourself. With it, you can serve confidently, knowing you won’t lose your house for volunteering your time.