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Subject: D&O ins coverage
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Author Messages
TeresaR4
(Arizona)

Posts:25


04/20/2019 7:12 AM  
We have a basic D&O policy designed for start ups with a developer still evolved. Our Ins carrier recommends we move to a standard policy. The developer is long gone. Some BOD members challenge the recommendation.Cost!I tend to be risk adverse and want to upgrade the coverage. Plus, I rely on the Ins broker as a professional.Im quite uncomfortable serving as BOD with out adequate insurance coverage. I feel BOD candidates have a right to know they may be undercovered. I am assigned to get quote and info. Any thoughts or points on experience on this subject. I am one of five votes and need to present compelling info.
CathyA3
(Ohio)

Posts:243


04/20/2019 7:43 AM  
First off, check your governing documents to see if there are any specific requirements for D&O insurance.

Insurance is one of those areas that tempt people to be penny wise and dollar foolish. I would ask the other board members if they are prepared to put their personal finances at risk if the association is under insured and the board gets sued. We are a litigious society, and HOAs seem to bring out the worst in some folks.

My association is insured up to $2 million for D&O claims, and we have an umbrella policy as well. I also beefed up my personal liability insurance after I was elected to the board.

MelissaP1
(Alabama)

Posts:8090


04/20/2019 8:54 AM  
Cathy's advice is spot-on and good. Just wanted to add since cost is a factor, that payment options may be available. Our insurance company let us do 10 month payments. Which helped fit in the expense into our budget. Otherwise, some want a lump sum or 6 months. 10 -12 months lowers the payments.

Many HOA insurance companies like to "bundle" services. That may be confusing to some as we often like to pick and choose options. That may not be an option due to bundling. For example we did not own a "HOA vehicle". Our insurance had it in the policy to cover one. We could not take it out of the bundle. However, what the insurance then meant to cover was if a board member was in their personal vehicle and has an accident, the insurance could kick in to cover certain expenses. So if I was going to the bookkeeper's office across town and had an accident. My insurance would pay but I could claim my deductible with the HOA's insurance. So look at certain bundled services at a different angle than "Hey the HOA doesn't own a car".

I think board member should be covered by insurance. Some may even want to get additional insurance on their own with their insurance company. Especially when you have people who want to sue because a needle dropped on the ground and it put them at risk of stepping on it....

Another thing to evaluate is if you have coverages for HOA property like clubhouses. The price of replacement changes over the years. If your clubhouse was to burn down today, would the insurance cover 80% of the replacement costs? The members of the HOA would be on the hook for the other 20% plus deductible. So do a check on can your HOA afford what could be a $20K + expense for clubhouse replacement or raise the insurance coverages?

Former HOA President
SteveM9
(Massachusetts)

Posts:3231


04/20/2019 12:06 PM  
We have a basic D&O policy designed for start ups with a developer still evolved. Our Ins carrier recommends we move to a standard policy.


Makes me think your not properly covered. If you had a claim and the policy was designed for X and you have a policy designed for Y they could deny you coverage for Z lawsuit because you were not specifically paying for that coverage. No doubt your insurance policy will be looked over with a fine tooth comb if you are ever sued. They will use any legal tool they have to get out of it.
SteveM9
(Massachusetts)

Posts:3231


04/20/2019 12:12 PM  
.... and if your paying on a policy that will never have to be paid out on, its a win for the insurance company. All profit, no loss.
GeorgeS21
(Florida)

Posts:1211


04/20/2019 12:45 PM  
I would never serve on a BoD without full D&O insurance coverage.
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