Shey sat in a meeting at her church in Fort Worth, staring at two empty leadership positions. As a trustee, she was in charge of finding new board members and elders. But no matter how many people she asked, no one wanted to step up.
After some tough conversations, Shey figured out why. The church required leadership members to pay for their own portion of church Directors & Officers insurance. People weren’t willing to take on that cost because they weren’t comfortable paying for financial protection they felt the church should cover.
Shey knew the church needed additional individual leaders, But she also knew they needed D&O insurance to protect those leaders from personal legal risk. She had to determine a better way to handle the premium cost, or the church would struggle to find people willing to serve.
Many Texas churches face this same issue. So who should pay for D&O insurance? Here’s what churches need to know.
Directors & Officers insurance protects church leaders and board of directors from personal financial risk if they are sued for decisions they make on behalf of the church. It helps cover legal defense costs, personal assets, and settlements from claims of fraud, mismanagement, financial disputes, or employment issues.
Most church insurance policies have this coverage as part of their overall risk management plan, and the church board covers this cost. This way, board members and trustees don’t have to worry about covering legal costs out of their own pockets if a claim is filed against them.
Shey realized this was the standard way most churches handled D&O insurance policies. If her church took on the cost, more people would be willing to serve in leadership roles without worrying about unexpected expenses.
Not every church covers D&O insurance for leadership members. Some ask trustees, board members, or elders to pay for their own portion of the policy since the policy primarily protects the leaders personal financial consequences rather than church assets.
While this might seem like a way to save money and give those Church Directors & Officers skin in the game, it often backfires. Many people simply won’t take leadership positions if they have to pay for their own protection for situations that can be out of their control. They may not want the financial responsibility, or they may feel like the church should be the one handling the cost for that layer of protection.
Shey saw this firsthand. A few members of the congregation had been interested in joining the board, but once they heard they had to pay for D&O insurance coverage, they backed out. The church was left without enough leadership, making it harder to make administrative and financial decisions.
One way churches cover the cost of D&O insurance without straining the budget is by including it in their church liability insurance program. Many Texas churches bundle D&O coverage with liability coverage, property coverage, and other coverage options. This makes it easier to manage and more affordable.
Shey’s church decided to explore this option. They worked with a church insurance specialist at Insurance For Texans to see how they could include D&O coverage in their budget without passing the cost onto board members. By restructuring their liability insurance coverage, they were able to provide protection for their leadership without asking individuals to pay out of pocket.
Shey’s church made a change that allowed them to fill leadership roles and keep their board members protected. They learned that Church D&O insurance is important, but how a church handles the cost can make all the difference. They had not ever considered alternatives to this church liability policy dilemma.
If your church is struggling with this issue, it’s time to take action. True Texas Church Insurance, offered solely by Insurance For Texans, helps churches find solutions that protect their ministries and leadership teams. Our independent insurance agents start by asking questions about your church's unique needs and ministries. They then help find the right type of insurance coverage for your church along with the right insurance company to provide it.
Click the button below to connect with a church insurance specialist today. Let’s find a way to protect your church leaders while keeping your ministry strong.