Checklist for Boards of Directors at NGOs: Managing Risk and Purchasing Directors and Officers (D&O) Liability Insurance

Nonprofit boards in the United States face growing legal, regulatory, and reputational risks. Directors and Officers (D&O) liability insurance protects volunteer and paid leaders from personal loss when they’re sued for alleged wrongful acts in managing an NGO. This checklist helps U.S.-based NGO boards — from small local charities in Denver to large statewide nonprofits in New York — evaluate risk, obtain the right D&O coverage, and control cost.

Why D&O matters for NGOs (quick overview)

• Protects individual directors and officers against claims alleging breach of fiduciary duty, mismanagement, employment practices, or regulatory investigations.
• Protects the organization (if entity coverage is included) for securities-like claims, regulatory fines in some jurisdictions, and legal defense costs.
• Encourages board recruitment — prospective volunteers are likelier to serve when they have personal liability protection.

For more context on why boards need D&O and how to protect volunteer boards on a budget, see: Why Nonprofits Need Directors and Officers (D&O) Liability Insurance: Protecting Volunteer Boards on a Budget.

Step-by-step checklist for boards buying D&O (Board-ready)

1. Conduct a board-level risk inventory

• Review recent litigation, donor disputes, employment claims, grant compliance, and regulatory exposures.
• Map programs and revenue sources (grants, government contracts, earned revenue) — grant-funded NGOs and those with government contracts face higher scrutiny.
• Document past claims history and governance practices.

2. Define who needs coverage and what limits

• Decide whether to buy:
  • Side A only (protects individual directors/officers only)
  • Side A/B (Entity reimbursement) (reimburses corporate entity when indemnification is allowed)
  • Side C / Entity coverage (claims against the organization itself)
• Typical limits for U.S. NGOs:
  • Small NGOs: $1M – $2M limits
  • Medium NGOs: $2M – $5M
  • Large NGOs or national organizations: $5M+

3. Identify required endorsements and exclusions to watch for

• Employment Practices Liability (EPLI) — often purchased together or as an endorsement.
• Professional liability for program services (if your NGO provides professional services).
• Punitive damage coverage, waiver of subrogation, and regulatory investigation defense — verify terms.
• See recommended endorsements: Endorsements Every Nonprofit Board Should Consider in Directors and Officers (D&O) Liability Insurance.

4. Gather underwriting information

• Latest financial statements (2–3 years)
• Board roster, governance policies, and conflict-of-interest policies
• Claims history and risk-management practices
• Program descriptions and contracts (government grants, foreign operations)

5. Solicit quotes from specialized insurers and brokers

• Use brokers experienced with nonprofits to obtain competitive D&O terms and negotiate retentions.
• Major carriers that underwrite nonprofit D&O include: Chubb, The Hartford, Travelers, CNA, and Philadelphia Insurance Companies.
• Example market guidance (U.S. market):
  • A small local NGO seeking a $1M/$1M D&O policy often sees premiums between $800 and $3,000 per year depending on state and risk factors.
  • Mid-size NGOs ($2M–$5M limits) commonly pay $3,000 to $15,000 annually.
  • Larger or higher-risk NGOs (multi-state operations, significant government funding) may pay $15,000–$100,000+ annually.
  • Sources: The Hartford, Insureon, Nonprofit Risk Management Center. See insurer pages for product specifics: The Hartford D&O (https://www.thehartford.com/nonprofit-insurance/directors-and-officers), typical cost discussions at Insureon (https://www.insureon.com/insurance/do-insurance/nonprofit), and risk guidance at the Nonprofit Risk Management Center (https://nonprofitrisk.org/resources/articles/d-o-insurance/).

6. Evaluate deductibles/retentions and aggregate vs. per-claim limits

• Retentions for nonprofits vary: $0–$25,000+ depending on claims history and limit selected.
• Confirm if retention applies per claim or per policy aggregate.
• Lower retention reduces upfront risk to directors but increases premium.

7. Negotiate and document governance improvements to secure better terms

• Demonstrate board training, compliance programs, background checks, and conflict-of-interest policies.
• Present your risk profile clearly to brokers and underwriters — see: How to Present Your Nonprofit Risk Profile to Secure Better Directors and Officers (D&O) Liability Insurance Terms.

8. Approve coverage and assign responsibilities

• Board resolution approving purchase and naming authorized officers.
• Assign a risk officer or committee to oversee renewals, claims reporting, and policy compliance.

9. Train directors and maintain ongoing governance hygiene

• Annual orientation on fiduciary duties and claims reporting.
• Keep accurate minutes, conflict-of-interest disclosures, and financial controls.

10. Review annually and after major events

• Trigger renewals or mid-term reviews after leadership changes, program expansions, or major grants.

Pricing and carrier comparison (U.S. examples)

Notes:

• Ranges are illustrative U.S. market examples; final price depends on state (e.g., California and New York often carry higher premiums), revenue, claims history, and program risk.
• For precise quotes, contact brokers or carriers. Public insurer product pages referenced above can help start shopping.

Common claim scenarios NGOs should anticipate

• Donor or funder alleges misuse of restricted funds.
• Employee sues for wrongful termination or discrimination (EPLI overlap).
• Board member accused of conflict of interest over contracting decisions.
• Government audit leads to subpoena or investigation into grant spending.

For concrete claims examples and lessons learned, see: Claims Examples from Nonprofits: Lessons on How Directors and Officers (D&O) Liability Insurance Responded.

Cost-control strategies for U.S. NGOs

• Choose appropriate limits and retentions based on risk appetite.
• Bundle D&O with EPLI or other nonprofit packages for discounts.
• Improve governance (board training, written policies) to secure better renewal terms.
• Consider captive programs or pooled purchasing for federated nonprofits.

Practical tips for limit selection and retention appear in: Affordable D&O Solutions for Charities and NGOs: Limit Selection and Retention Tips.

Quick action checklist (one-page summary for board packets)

• Conduct risk inventory and confirm prior-claims record
• Decide coverage type: Side A / Side A/B / Side C
• Choose target limits ($1M, $2M, $5M+)
• Collect financials, governance documents, and program summaries
• Obtain 3+ quotes via experienced nonprofit broker
• Review endorsements (EPLI, regulatory defense, professional liability)
• Approve policy with board resolution and assign claims contact
• Schedule annual governance review and insurance renewal

Sources and further reading

• The Hartford — Nonprofit Directors & Officers Insurance overview: https://www.thehartford.com/nonprofit-insurance/directors-and-officers
• Insureon — D&O Insurance for Nonprofits (market guidance): https://www.insureon.com/insurance/do-insurance/nonprofit
• Nonprofit Risk Management Center — D&O Insurance resources: https://nonprofitrisk.org/resources/articles/d-o-insurance/

For practical governance improvements that reduce premiums and claims exposure, review: Volunteer Directors and Liability: Coverage Nuances in Directors and Officers (D&O) Liability Insurance for Nonprofits.

If your NGO operates in higher-risk U.S. states (e.g., California, New York, Texas, Florida) or handles large government grants, prioritize quotes from carriers experienced in nonprofit grant-related investigations and regulatory defense (ask about investigative/response endorsements specifically).