Community Association boards face unique risks that require specialized insurance protection. Directors & Officers (D&O) coverage is essential for safeguarding board members against claims that arise from their governance duties. Here are the key reasons every community association should carry this coverage:

• Simple disagreements can escalate into significant claims. What begins as a minor dispute between a board and a homeowner or vendor can quickly turn into a formal demand for financial damages. Without D&O coverage, board members may be personally liable.
• D&O claims are typically excluded from General Liability policies. Many associations assume their existing liability insurance will protect them, but standard General Liability policies do not cover claims related to board decisions, mismanagement, or governance disputes.
• Boards face lawsuits for breach of contract, mismanagement of funds, and discrimination. Community association boards can be sued by employees, vendors, members, or even neighbors for a wide range of allegations including breach of contract, non-monetary damages, mismanagement of funds, and third-party discrimination.
• Association bylaws may indemnify the board but lack the financial resources to back it up. While many association bylaws include indemnification clauses for board members, the association itself may not have the funds needed to actually defend and settle a claim.
• Former board members can still be sued. Even after leaving the board, former members can be named in lawsuits for incidents that occurred during their tenure. D&O coverage typically includes a Lifetime Occurrence Reporting Provision to address this risk.
• Defense costs are covered separately, outside of policy limits. In D&O claims, legal defense costs can be substantial. A quality D&O policy covers these defense costs outside of the policy limits, ensuring the full policy amount remains available for settlements or judgments.

Protecting your community association board with Directors & Officers coverage is a smart and necessary investment. Getting started is easy — contact us today for a quote and ensure your board members are fully protected.