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 your board, you have exposure that your general liability insurance may not cover.
Working on your condo’s board without D&O is like flying on a trapeze without a net, or walking around with your wallet hanging outof your pants. You are bound to get hurt or lose your money.
Your homeowners policy DOES NOT cover you for this exposure.
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 , property managers and The developer.
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.