The Role of Insurance in Protecting Pastors and Board Members

I’ll be honest with you — when I first started serving in church leadership years ago, I thought “insurance” was just that thing we paid for so the building would get fixed if a storm knocked out half the roof. I didn’t realize there was a whole other side to it… the side that’s about protecting people, not just property.

Fast forward a few years — and a few very tense board meetings — and I learned something that’s stuck with me:
In ministry leadership, your name can end up in a lawsuit faster than you can say “We’ll pray about it.”

It’s not about being paranoid. It’s about being prepared. And one of the most overlooked ways to protect pastors, elders, and board members is with the right kind of insurance.

Why Pastors and Board Members Can’t Rely on “The Church Policy” Alone

Here’s a dangerous myth I hear all the time:

“We’ve got church insurance — we’re covered.”

The problem? Not all church insurance is created equal. A standard policy might protect the building, the sound system, the church van… but not the decision-makers who keep the whole thing running.

I’ve seen situations where a pastor, acting in good faith, made a leadership decision that some people didn’t like. It escalated into a legal mess, and suddenly that pastor’s personal name was on the lawsuit — not just the church’s.

Cautionary Tale (worth your coffee sip pause):
A pastor I heard about in another state got caught up in a property dispute between the church and a neighboring landowner. The church was sued. No surprise there. But so was the pastor — personally. He thought the church’s policy had his back. Turns out, it didn’t.
He ended up paying thousands in legal fees out of pocket just to defend himself. He won the case… but at the cost of months of sleepless nights and a savings account that may never recover.

Meet Your Two New Best Friends: D&O and EPLI

When it comes to protecting church leaders from personal risk, two insurance terms should be on your radar: Directors & Officers (D&O) Insurance and Employment Practices Liability Insurance (EPLI).

I know — they sound like something you’d rather file away and never think about. But trust me, these two could be the difference between “We’re okay” and “This could ruin us.”

1. Directors & Officers (D&O) Insurance — The Decision-Maker’s Shield

Think of D&O as a safety net for your leadership decisions.
If you’re on the board or in the pulpit, and someone claims you mishandled funds, broke a bylaw, or acted against the church’s best interest — D&O is what stands between you and a personal financial disaster.

It can cover:

• Allegations of poor stewardship or financial mismanagement.
• Claims that you failed to follow the church’s own governance rules.
• Disputes over decisions that affected members or staff.
• Legal costs even if you’re ultimately cleared.

Without D&O, you’re banking on the church paying to defend you. And if the church’s own finances are shaky? You might be on your own.

2. Employment Practices Liability Insurance (EPLI) — The People-Side Protector

If you’ve been in church leadership for more than five minutes, you know staff and volunteer relationships can get… complicated.
EPLI steps in when legal trouble comes from the people side of ministry.

It covers claims like:

• Wrongful termination.
• Discrimination (age, gender, race, disability, etc.).
• Harassment allegations.
• Unfair treatment or failure to promote.

These cases can drag on for months and drain resources faster than you think. And they’re not just “big church” problems — small congregations face them, too.

Real-world example:
A mid-sized church dismissed a staff member due to repeated performance issues. The dismissal was handled professionally — or so they thought. The staff member later filed a claim alleging discrimination. Even though the church won in court, their legal defense costs were nearly $80,000. EPLI would have covered most of it.

It’s Not Just About Winning in Court

Here’s what most people overlook:
These policies aren’t just about the verdict. They’re about affording the fight.

The truth is, even if you “win,” legal fees can crush you financially. And it’s not just about money — it’s about your reputation, your peace of mind, and your ability to focus on ministry instead of court strategy.

How to Make Sure Your Leaders Are Actually Covered

Step 1: Review What You’ve Got

Pull out your current policy and look for D&O and EPLI specifically. If you can’t find them listed, you probably don’t have them.

Step 2: Check the Numbers

If you see $50,000 in coverage, that’s not much. One employment claim could blow through that in months. For most churches, a higher limit is worth the small increase in cost.

Step 3: Ask the Hard Question

Once a year, during a board meeting, look around the room and ask: “If we get sued tomorrow, are the people in this room personally protected?” If there’s hesitation, it’s time to act.

Step 4: Get Your Governance in Order

Insurance works best when your policies and procedures are clear. That means solid bylaws, documented decisions, conflict-of-interest policies, and regular audits.
(Pro tip: this is a big part of what we do at Church Law & Strategy.)

Why This Matters More Than You Think

When leaders feel protected, they lead better. They make tough calls with courage instead of fear. They stop worrying about “what happens to me if this goes sideways?” and start focusing fully on the ministry.

And here’s the thing — protecting leaders isn’t just wise, it’s biblical stewardship. We protect what’s valuable. And your pastors, elders, and board members are worth more than any building or piece of property your church owns.

Our Links

• Church Legal Audit and Recommended Action Report
• Corporate Governance Review and Succession Plan
• Comprehensive Church Insurance Review and Report

Other Resources to Check Out!

• National Council of Nonprofits – D&O Insurance Overview
• GuideOne Insurance – Protecting Church Leadership
• Nonprofit Risk Management Center – EPLI Essentials

Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. Reading this content does not create an attorney-client relationship between you and Church Law and Strategy or its representatives. For specific legal advice tailored to your church or organization, please consult a licensed attorney.