Directors and Officers Liability Insurance (D&O)

Directors and Officers Liability Insurance, commonly known as D&O insurance, is a crucial protection for communities. This specialized coverage protects the personal assets of board members and other key individuals associated with the community against claims of mismanagement or wrongdoing.
d&o insurance

Who does D&O insurance cover?

D&O insurance provides protection for a wide range of individuals associated with the community, including:
  • Current board members
  • Past board members
  • Spouses of board members
  • Volunteers
  • Employees
  • Management personnel
Allegations may be monetary or non-monetary and can include claims such as defamation, breach of contract, or discrimination. This comprehensive coverage provides for those who dedicate their time and effort to managing the community to be protected from personal financial risk.
 

What does D&O insurance cover?

D&O insurance covers “wrongful acts,” which include a variety of claims that could be made against board members and their associates. Examples of these claims include:
  • Breach of contract
  • Breach of fiduciary duty
  • Defamation
  • Discrimination
  • Employment disputes
  • Foreclosure actions
  • Harassment claims
  • HOA fee disputes
  • Misrepresentation
  • Negligence
  • Property damage related to mismanagement
  • Violation of CC&Rs
While D&O insurance provides broad protection, it is subject to reasonable limitations. For instance, if a board member acts outside the scope of their responsibilities—such as engaging in personal misconduct or physical assault—they would not be covered under the policy. Furthermore, D&O insurance does not cover bodily injury or property damage, which would fall under the community’s general liability (GL) or workers' compensation policies.
 

Why is this coverage important?

D&O insurance is essential for protecting community boards and individuals from personal liability stemming from decisions they make while managing the community. This coverage extends to current and former board members, spouses, volunteers, and employees, ensuring they are not held personally responsible for legal costs, settlements, or judgments related to allegations of wrongdoing or mismanagement.
 

Real-world scenarios

To better understand the importance of D&O insurance, consider these real-world claim examples:
  • Property modification dispute: A HOA board denies a homeowner’s request to make architectural modifications to their property, such as adding a deck or changing the exterior color. The homeowner then sues the board, alleging that the denial is in violation of the HOA’s own rules. In this case, D&O insurance would typically cover the legal defense costs and any settlements or judgments resulting from the lawsuit.
  • Therapy pet dispute: A community wrongfully denies a resident’s request for a therapy animal, resulting in a complaint. D&O coverage would help with legal representation and potential settlement costs.
 

Invest in your community's protection

Our team at FS Insurance Brokers is committed to providing you with expert advice and solutions for complex insurance situations. By choosing us, you are partnering with industry experts dedicated to your community's long-term security and financial stability.

Our commitment to management education, mitigation, and controls allows us to source superior programs with coverage at competitive, needs-based rates.

Contact our team of experts today to learn how our property insurance expertise can help protect your assets and secure your community's future.
 
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