Insurance dilemma...

I know every situation is different and it is impossible to know the nuances of every situation up front, but the newly established Board is in the process of obtaining liability insurance for the first time. We have gotten half a dozen quotes, all pretty much the same for around $1000 which include Directors & Officers liability up to $1,000,000. Now a quote has come in that is $700 dollars higher than the others but it has an extremely comprehensive D & O rider that broadens the definition of the insured amongst other things, below is partial explanation of higher cost:

"they have the DUTY to defend the officers against a suit, and the defense costs are OUTSIDE of the coverage limits of the policy which is good because court costs can run high and consume the limit that can be attributed to any judgments.

Also, Citizens offers protection against non-monetary suits which Auto-Owners does not and I am 99% sure that State Farm doesn’t as well. This is very important for you. A very good number of association lawsuits take place over non-monetary suits. For example, if suit is brought against the board for not enforcing the association rules, or for non fairness of enforcement, etc this would be an example of a non-monetary suit. Being that your association was there but adminitstered by the builder since 2003, he could have let some rules be violated then when you and the board go about correcting the issues, you never know what could happen when you have 115 families that have been living with an “apparent standard” of living that varies from the rules.

Bottom line is that, yes, it is $700 more than the other two quotes but saving that $700 now might just cost the association a lot more in the long run"

I am of two minds.

1) That is alot of extra premium for what we are getting - if we do our job correctly shouldn't need it.

2) We are inviting trouble if we reject the comprehensive coverage.

Also, there is a $5,000 deductible with the comprehensive plan.

Anyone else have experience or opinions on this optional, extended coverage?

Do you already have in place liabilty insurance for areas the HOA is responsible for (pool, common areas, etc)? If you do then that company may be offer you a "package"that include the BOD. What does your state laws say about liability of HOA BOD?

Valeria - I suggest you go to your current Insurance Agent and ask them what the difference in the policy you presently have and the policy that is $1700. Why would this 1 company quote this coverage and the other companies didn't. Does this $1700. include the cost of an umbrella policy? What is the deductible on the other quotes. Usually the higher the deductible the lower the premium. Take all the info you have received from this forum and discuss with your insurance agent. The more info you get from the insurance agents the better to make the right decision. Hope this helps.