D&O Insurance 101

A Community Association management company can help any Board understand the necessities required to protect their community and ensure that it runs smoothly. From emergency insurance to financial protection, a Community Association Board has a lot of responsibilities to consider.

What happens, however, when there is a lawsuit against the Association? How can a Board protect its volunteers?

One often overlooked area of insurance is D&O insurance. With all of the responsibilities that the Board has, it makes sense that not every member of a community will be pleased with the Board’s actions. Disagreements can even lead to legal action against the Board. These actions are why D&O insurance is crucial to a Board of a common interest community.

Stay informed and make sure that you understand how helpful this insurance can be, and how your management team can ensure it becomes part of your overall protection.

Why is D&O Insurance Important?

As mentioned before, an Association Board has many responsibilities and the people who volunteer on these boards usually do so with the best intentions. However, in modern times, when people become disgruntled or unhappy with decisions that impact them, the word “lawsuit” seems to be thrown around quite frivolously.

D&O coverage should be in place for a Board to cover any legal issues that may arise against the Board.

Who is Covered by This Insurance?

Based on how your management team and insurance carrier work with your Board when crafting your insurance coverage, your D&O insurance can include and exclude specific people involved with Board actions.

A typical policy will cover all Board members of the HOA. This is crucial because sometimes an individual wanting to sue over something will have an issue with a specific Board Member and not the Board as a whole. With D&O insurance, the legal costs and fees for any legal claims against them are covered.

However, it is not just the Board that can be covered by this insurance. D&O insurance also has the potential to insure:

  • Committee members
  • HOA employees
  • Volunteers of the HOA

Once again, the coverage is limited to who the HOA wants the policy to protect, note, that most policies only cover current Board Members.

Are There Limits to My Community’s Coverage?

In short, yes. Every insurance policy has a limit. However, the maximum coverage limit for a D&O policy for an Association Board is determined by the size of the development and what type of amenities are offered in the community.

Are there gated entrances? Security? Pools and fitness centers?

All of this and the number of people living in the Association help an insurance agent determine how strong the protection on the policy needs to be. In order to best be prepared when deciding on D&O insurance, consult with your management team for an estimate of what these costs and coverage possibilities may be.

Goodwin & Company Helps You Understand Coverage on All Fronts

Whether your Community Association Board has questions about emergency preparedness, selecting a new Board Member, or acquiring D&O insurance, Goodwin & Company has all of the answers. Contact us today to speak with a member of our experienced team and find out how our association management team can work wonders for your community.