D&O Coverage for Condominium Associations

By: Alexis Kimball, Agent Relations Manager

What is D&O coverage and do you need it on your master condo policy? 

Directors & Officers coverage is not mandatory, unless required under the bylaws, but foregoing this coverage may not be a wise decision. Regardless of the size of your condominium association, if you have people volunteering their time on the board, you have exposure that your general liability insurance may not cover. 

The directors and officers on your condo association board make many important decisions throughout the year that effect your living situation. They use their best judgment in determining how to spend the reserve fund for things like repairs and maintenance. They also maintain and communicate the rules and regulations of the complex. If one of these decisions results in a lawsuit against the board or an individual in the organization, you will want to have insurance.

Standard general liability insurance policies only cover claims for bodily injury or property damage. D&O covers mismanagement of association affairs, failure to maintain adequate reserves and records, and failure to enforce rules and regulations. 

Things to review in your D&O policy:

Who is insured?                                        

Make sure that everyone handling decisions is covered on your policy. This may include: the association, past and present directors, trustees, officers, volunteers, committee members employees and property managers.

How much coverage do you have?  

Defense costs are often limited to the policy limits so make sure you have enough coverage.

Are there any exclusions in coverage? 

It's important to know that your D&O insurance may not cover decisions made regarding the association's insurance policy, contractual and developer liabilities, discrimination and civil rights, or claims may by one board member against another board member.  

To find out more about D&O coverage for your condominium association, ask a professional insurance broker or contact us at sales@brownstoneinsurance.com.