Protect Your Board Members

June 15, 2016

Serving as a board member or officer often inspires a special sense of responsibility for many who serve in such a role at their church or related ministries. That responsibility, however, also carries with it certain financial risks connected to the outcome of board actions. For example, a board member or ministry officer could face personal liability for a variety of damage claims, some of which include:

  • Failing to maintain adequate financial records
  • Developing and applying membership standards that favor one group or individual over another
  • Exceeding the authority that the organization’s charter or bylaws grant to the board
  • Using budgeted or donated money in a manner different from the originally designated purpose
  • Failing to preserve the church or ministry’s tax-exempt status

In most cases, standard general liability insurance policies don’t cover claims against directors or officers resulting from failure to perform their duties. Churches and ministries must purchase separate liability coverage to protect ministry leaders from financial damage claims.

Why Purchase D & O Insurance Coverage?

Although many states have enacted legislation providing some protection for directors and officers of not-for-profit organizations, your church or related ministry should have D & O insurance protection for several reasons:

  • D & O insurance provides defense funds to refute a claim or to prove immunity under the state law.
  • Although your state may have legislation protecting not-for-profit directors and officers from lawsuits, a covered claim may fall outside the protection of the state statute.
  • D & O coverage usually includes the organization as an insured; state immunity statutes often don’t.
  • If state laws don’t protect your ministry and its board, and someone brings a successful suit against you, D & O insurance pays covered financial damage claims that directors and officers are legally responsible to pay.

Check with your insurance agent to learn more about how this valuable coverage can protect your ministry and its leaders.