Directors and Officers liability insurance (D&O) provides coverage in the event of a lawsuit claiming some Board or individual Directors’ act or omission. D&O insurance does not protect the association when a claim is made for personal injury or property damage as a result of negligent actions of the Board of Directors.
Personal injury and property damage claims generally fall under the general liability policy of the association.
However, if a Board or individual Director knowingly violates the association’s governing documents or applicable law, D&O insurance will not generally provide coverage.
Each Board member is expected to act in good faith and in the best interest of the association. A board member is obligated to apply diligence, obedience and loyalty in the performance of his or her authority. With this authority comes these possible grounds for a lawsuit.
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