Below are some of the reasons nonprofits believe they don't need D&O insurance and why they are wrong:

But Charities Are Immune From Liability in Our State

Charities are immune from many types of liability under some state laws. Legislation often protects volunteers, board members, and staff. However, court decisions and statutes provide only limited protection. There are several reasons it still makes sense for your organization to get D & O coverage.

1. Immunity from liability doesn't mean that someone can't sue you and force you to incur expenses defending your organization and its directors, employees, and volunteers. One of the principle reasons for buying D & O coverage is that it will pay for the costs of defense. According to a recent industry survey, the average costs incurred by a nonprofit organization to defend a D & O case is $147,274. Unless your organization has sizeable cash reserves, you may not have the funds to pay an attorney to defend you.
2. State immunity laws, while good, may not protect your organization and its board members, staff and volunteers from all potential liabilities. Many cases brought against nonprofit organization boards and staff are based on federal laws which may be unaffected by your state immunity.
3. The state laws which provide immunity for your staff, board members and volunteers, often only do so if the organization has insurance coverage.

But Our Board Members Have Personal Liability Insurance
No. Is it really fair to ask your board members to put their personal insurance policy on the line for the volunteer work they do in your organization? Many board members rightfully feel that they want their personal insurance policy to cover their personal needs. They expect you to protect them for the volunteer work they do for your organization. And, in any event, an individual's personal policy provides no protection for your organization, its staff or other board members and volunteers.

But We Already Have General Liability Coverage

No. To put it simply, general liability coverage is extremely limited. It doesn't provide protection for many of the people you want to protect. Nor does it cover many of the situations that are most likely to occur. For example, somebody slips and falls in your office and sues your organization for their injuries - that's likely to be covered by your general liability policy. The same person sues your officers and directors alleging they were negligent in managing the organization by allowing a dangerous condition to exist! That won't be covered in most general liability policies, but may be covered as a D & O claim.