But, some D&O policies will only cover lawsuits that have a final ruling. Most of the time, it will also cover the settlement amount in case of a ruling. For the best protection, an HOA Directors and Officers insurance policy is essential.Ī D&O insurance policy typically includes fees associated with a legal defense. While this list carries a lot of weighty items, you should know that homeowners have sued board members for a lot less. Improper use of association funds (fraud, embezzlement, theft, etc.).But, what do HOA board members even get sued for? Even if it’s about the smallest of things, homeowners who have the resources aren’t afraid of taking their grievances to court. The act of suing the HOA board of directors happens more often than you might think. In that case, your HOA manager will likely not be part of the policy’s coverage.Ĭommon Reasons Why Board Members Get Sued For example, a D and O policy may state that coverage is not included for non-owners. Keep in mind that some policies explicitly exclude some people from coverage. But, depending on your insurance provider, HOA board insurance may also cover select employees or personnel. Though, it typically won’t cover past members of the board - those who are no longer serving. HOA Directors and Officers insurance will cover everyone on the HOA board. Who Is Covered Under Directors and Officers Insurance? That type of coverage only protects you as a private individual and not as a member of your board. It does not include protection for individual board members or officers.Įven if you have Personal Liability Protection under your policy, that still won’t cut it. General Liability insurance is designed to protect the association itself. While it is equally important to have General Liability insurance for your HOA, it simply doesn’t offer the same coverage as a D&O policy does. Won’t General Liability Insurance Suffice? With adequate HOA Directors and Officers insurance coverage, the board members won’t have to worry about becoming bankrupt as a result of helping their community. Even if a case doesn’t reach the court, or a judge dismisses the case, there will still be legal expenses. HOA D and O insurance will cover board members’ legal costs and damages in case a homeowner sues them. Otherwise, nobody would ever join the HOA board. In order to attract homeowners to the board, they need to be assured that they won’t be financially burdened by lawsuits and legal expenses. There is no monetary compensation for the services they provide to the community. A master insurance policy for homeowners association typically does not cover board members, but a D&O policy will.īoard members are simply volunteer homeowners. D & O insurance for homeowners associations serves to protect the board from personal liability. It is not uncommon for homeowners to pursue legal action against the association and, by extension, the board members. You may be thinking, “Why should I have directors and officers insurance?” Why Is It Necessary to Get D&O Insurance for HOA Board? When that happens, board members like you need to have sufficient protection so that you don’t need to pay for legal fees out of pocket. More often than not, these lawsuits also mention individual board members by name. Can a board member be sued individually? Even the smallest of disagreements between a homeowner and the HOA can quickly escalate into a lawsuit.