How much D&O insurance does a nonprofit need?

What D&O actually covers, and what it does not

Directors and officers liability covers claims arising from management decisions: the choices your board and leadership made, or failed to make. Wrongful termination. Discrimination and harassment claims. Breach of fiduciary duty. Misrepresentation to funders. Failure to supervise. Mismanagement of restricted funds.

It does not cover bodily injury or property damage, which is general liability. It does not cover employee theft, which is a fidelity or crime bond. It does not cover professional errors in a service you deliver, which is professional liability. It is worth mapping these boundaries before you need them.

One important note for nonprofits: in a January 2026 guide, Ingram Insurance says over 90% of nonprofit D&O claims are employment claims. If your policy leaves out employment practices liability, or sublimits it (caps it well below the headline limit), the headline limit is misleading. Ask about this first.

Three inputs that set the number

1. Your annual budget

   Ingram Insurance says most nonprofits with revenue under $2 million carry $1 million, and larger budgets call for higher limits. If you are weighing a lower limit, ask for a quote at both and compare.

2. Whether you have employees

   This is a big driver, because employment claims are the bulk of nonprofit D&O claims. A volunteer-run organization and a fifteen-person organization with the same budget are not the same risk. If you have staff, employment practices coverage matters more than the headline limit.

3. Who you have to satisfy

   Funders, landlords and government contracts can impose minimums. Collect these before you shop, because a contract requiring $2 million settles the question.

A rough starting frame

Organization	Common starting point
Under $250k budget	$1M, and check that volunteers are covered, not only directors
$250k to $2M budget	$1M to $2M. If you have staff, confirm employment practices coverage
$2M to $10M budget, or more than 50 staff	$3M to $5M
Government or federal grant funded	Check the award terms first. They may set the floor

The budget bands follow Ingram Insurance's guide. They are starting points, not rules. A childcare or youth program carries more risk than an arts group with the same budget. A broker will price that in.

What it costs

As of 2026, Insureon says its small nonprofit customers pay an average of $67 a month for D&O. Most of those customers have fewer than five employees and revenue from about $50,000 to over $200,000. An average hides a wide range. Price turns on your services and risk level, then board size, staff and volunteers, revenue, location, the limit and deductible you choose, and your claims history.

If you are torn between two limits, ask for a quote at both and compare.

Six questions to ask a broker

• Is employment practices liability included, and at what limit? Or is it sublimited, capped below the headline limit?
• Are volunteers and committee members covered, or only directors and officers?
• Is it claims-made, so it only covers claims filed while the policy is active? If so, what is the retroactive date, the earliest decision it will cover?
• Do defense costs erode the limit, so lawyer bills come out of the same $1 million? Or do they sit outside it?
• What are the exclusions that would actually apply to us, in plain terms?
• What does tail coverage cost if we wind down or merge? Tail coverage is an add-on for claims filed after the policy ends.

The claims-made question matters more than it sounds. A claims-made policy responds to claims made during the policy period, so a lapse in coverage can leave years of past decisions unprotected.

Why boards care about this personally

Directors can be named individually. State volunteer protection laws help, and so can your bylaws. Bylaws can promise that the organization pays a director's legal costs, which is called indemnification. But that promise is only as good as the money behind it, and an organization facing a big claim may have the least. D&O is what makes the promise real. Good board candidates may ask about it before they say yes.

This is general information, not insurance, legal or financial advice. Coverage terms, availability and pricing vary by state, insurer and organization, and the figures here are illustrative rather than quotes. Talk to a broker who places nonprofit D&O regularly before deciding.

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Sources: Insureon, D&O insurance for nonprofits; Ingram Insurance, how much nonprofit D&O insurance. Verified September 2026. Coverage and pricing vary by state and insurer; confirm with a broker.