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Endorsements Every Nonprofit Board Should Consider in Directors and Officers (D&O) Liability Insurance

Directors and Officers (D&O) liability insurance is essential for nonprofits, NGOs, and charities across the United States — from New York City and Chicago to Los Angeles and Houston. Standard D&O policies protect volunteer and paid leaders for wrongful acts in governance, but policy endorsements and add‑ons tailor protection to the real exposures nonprofits face: donor disputes, employment claims, fiduciary matters, volunteer conduct, and regulatory investigations. Below is a practical, actionable guide to the endorsements your board should evaluate, estimated price impacts in the U.S. market, and buying tips.

Why endorsements matter for nonprofits

Standard D&O covers individual directors (Side A) and reimbursement of the organization (Side B); many nonprofits also need Side C/entity coverage and additional endorsements to close important gaps:

  • Nonprofit operations are donor‑funded and highly visible — exposure to donor disputes, grant investigations, and charitable solicitation claims is high.
  • Volunteer leaders often function without pay and rely on volunteer‑friendly language (Side A) and charitable‑organization considerations.
  • Employment and fiduciary exposures (retirement plans, benefits) can produce expensive claims even for small charities.

For background on core reasons to buy D&O, see Why Nonprofits Need Directors and Officers (D&O) Liability Insurance: Protecting Volunteer Boards on a Budget.

Key endorsements every nonprofit board should consider

1. Side A Difference in Conditions (DIC) / Side A Enhancement

  • What it does: Ensures individuals are covered when the organization cannot indemnify directors (e.g., insolvency or indemnity prohibited by law).
  • Why it matters: Volunteer directors need coverage that pays them directly regardless of the nonprofit’s ability to reimburse.
  • Estimated additional cost (U.S.): $200–$1,500 annually depending on limits and organization size.
  • When to add: Small charities with volunteer boards or nonprofits with limited indemnification resources.

2. Entity Coverage / Side C (Entity Liability)

  • What it does: Extends coverage to the nonprofit organization itself (e.g., for securities/derivative claims, regulatory matters).
  • Why it matters: Some disputes (e.g., donor class actions, government investigations) name the entity — Side C fills that gap.
  • Estimated additional cost: $500–$5,000+ annually depending on revenue and policy limits.
  • When to add: Mid‑sized and larger nonprofits, or when grants and public visibility increase entity exposure.

3. Employment Practices Liability (EPL/EPLI) Endorsement

  • What it does: Covers wrongful employment acts: wrongful termination, discrimination, harassment, retaliation.
  • Why it matters: Employment claims are one of the fastest‑rising claim categories for nonprofits; small orgs often underestimate exposure.
  • Estimated additional cost: $500–$4,000 per year (smaller orgs typically on lower end).
  • When to add: Any nonprofit with paid staff (even small payrolls) or volunteers in oversight roles.
  • For nuances around volunteer directors and employment exposures, see Volunteer Directors and Liability: Coverage Nuances in Directors and Officers (D&O) Liability Insurance for Nonprofits.

4. Fiduciary Liability (ERISA) Endorsement

  • What it does: Protects trustees and the entity against claims relating to employee benefits and retirement plan administration.
  • Why it matters: Errors in benefit plan management (e.g., 403(b) plans) can trigger costly ERISA lawsuits and fiduciary claims.
  • Estimated additional cost: $300–$3,000+ annually depending on plan assets and participants.
  • When to add: Any nonprofit sponsoring employee benefit or retirement plans.
  • For deeper reading on donor and fiduciary disputes, see Fiduciary and Donor Disputes: How Directors and Officers (D&O) Liability Insurance Handles Nonprofit Claims.

5. Crime / Employee Dishonesty Endorsement (or Separate Crime Policy)

  • What it does: Covers theft of funds by employees or volunteers, forgery, and fraud.
  • Why it matters: Donor funds and grant funds are attractive targets; criminal acts can devastate small nonprofits.
  • Estimated cost: $300–$5,000+ annually based on revenue/exposure; often cheaper when bundled with other products.
  • When to add: Recommended for most nonprofits — especially those handling cash, grants, or holding restricted funds.

6. Insured vs. Insured (I v. I) Carve‑Outs

  • What it does: Removes or limits the common exclusion that bars coverage for claims by one insured against another (e.g., board conflicts).
  • Why it matters: Internal disputes (board fights, whistleblower suits) can otherwise be excluded.
  • Estimated cost: Varies; can be modest if focused on specific claim types (e.g., employment).
  • When to add: Nonprofits with potential internal governance contention or complex board structures.

7. Crisis Management / Reputation Protection Endorsement

  • What it does: Pays for PR, crisis counsel, and related costs after reputational incidents (scandals, fraud, data breaches).
  • Why it matters: Reputational damage can cause funding loss; quick professional response is essential.
  • Estimated cost: $250–$2,000 annually for modest crisis limits.
  • When to add: High‑visibility nonprofits or those with significant donor/public profiles.

8. Extended Reporting Period (ERP) / Run‑Off (Tail)

  • What it does: Gives insureds a window to report claims after policy cancellation or nonrenewal (especially important for claims‑made policies).
  • Why it matters: Claims may arise after directors step down or the organization changes insurers.
  • Estimated cost: One‑time fee typically 100–300% of expiring annual premium for a 1–3 year tail (depends heavily on insurer).
  • When to add: Any nonprofit on a claims‑made D&O policy — especially those undergoing leadership turnover, mergers, or closure.

How these endorsements typically affect premiums (U.S. market examples)

Pricing varies by revenue, claims history, city, and insurer. Typical ranges observed in the U.S.:

  • Small nonprofit (annual budget under $500K) — base D&O (1M/1M): commonly $500–$1,500/year; adding EPL and Side A DIC may raise total to $1,000–$3,000/year.
  • Mid nonprofit ($500K–$5M) — base D&O: $1,500–$7,500/year; adding fiduciary, EPL, and crime can push to $3,000–$12,000/year.
  • Large/complex nonprofits — programs are individually priced; enterprise D&O placements can exceed $20,000–$100,000+ annually.

Market references:

Specific carrier notes:

  • Hiscox and Insureon often provide affordable online entry‑level D&O quotes for smaller nonprofits (examples of small‑org premiums start in the low hundreds to low thousands annually).
  • Chubb, Travelers, CNA, and AIG are common choices for mid‑to‑large nonprofits and custom programs; expect higher premiums but broader underwriting and tailored endorsements.

Sample metro impacts:

  • New York City and San Francisco nonprofits frequently pay higher premiums due to higher litigation exposure and defense costs.
  • Smaller markets such as Boise, ID or Des Moines, IA often see lower base premiums for comparable budgets.

Comparison table: common endorsements (U.S. price guidance)

Endorsement Purpose When Essential Estimated Additional Annual Cost (U.S. ranges)
Side A DIC / Enhancement Direct payment to individual directors when org can’t indemnify Volunteer boards, thin reserves $200 – $1,500
Side C / Entity Coverage Coverage for the nonprofit entity Mid/large orgs, public/private grants $500 – $5,000+
EPL / Employment Practices Employment claims, harassment, discrimination Any org with staff $500 – $4,000
Fiduciary Liability ERISA/benefit plan administration errors Organizations with retirement/benefit plans $300 – $3,000+
Crime / Employee Dishonesty Theft, forgery, embezzlement Orgs handling funds/grants $300 – $5,000+
Insured vs Insured carve‑outs Covers some internal dispute claims Governance disputes, whistleblowers Variable
Crisis Management PR, crisis counsel after reputational events High‑profile nonprofits $250 – $2,000
ERP / Tail Reporting after policy cancellation Leadership/structural change periods 100–300% of expiring premium

(Estimates are illustrative; actual costs depend on revenue, claims history, limits, location, and insurer.)

Purchase and underwriting tips for boards (U.S. focused)

  • Present a clear risk profile: budgets, governance structure, volunteer counts, payroll, benefit plans, grant sources — see How to Present Your Nonprofit Risk Profile to Secure Better Directors and Officers (D&O) Liability Insurance Terms.
  • Work with brokers experienced in nonprofit D&O — they can package Side A, EPL, fiduciary, and crime affordably.
  • Ask for carve‑outs where appropriate: Insured v. Insured carve‑outs for employment claims and whistleblower suits are often negotiable.
  • Consider bundling crime, EPL, and D&O under a management liability package for price efficiencies.
  • Shop multiple carriers: Hiscox and Insureon channels are good for small orgs; Chubb, Travelers and CNA often work best for complex placements.

Final checklist for boards

  • Review existing D&O declarations and exclusions with counsel.
  • Confirm retroactive date and ERP (tail) terms.
  • Add Side A DIC if volunteers are relied upon.
  • Add EPL and fiduciary if you have employees/benefits.
  • Purchase crime coverage or a crime endorsement when handling donor funds.
  • Negotiate Insured vs Insured carve‑outs for internal dispute exposure.

For practical examples of claims and lessons learned, see "Claims Examples from Nonprofits: Lessons on How Directors and Officers (D&O) Liability Insurance Responded" and for smaller budgets, review "Designing a Cost‑Effective Directors and Officers (D&O) Liability Insurance Program for Small Charities" on Insurance Curator. Links:

Sources:

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