Errors and Omission Insurance

Gerry,

Sometimes this is also called Directors and Officers or D&O insurance, and yes, I would strongly urge you to carry it, even if it's a small HOA.

Board members and officers can be held personally liable for their actions as board members. The purpose of D&O insurance is to pay for the defense of and any awards (up to the limits of the policy) for any claims against the board and its members resulting from their "errors" and "omissions."

From what I have seen, most such policies require that board members be indemnified in the bylaws of the HOA corporation. (Do you have such a clause in your bylaws? If so, that's why it's there.) Also, you should be aware that most D&O insurance does not cover board members if they knowingly violate the law.

There's an endless possibility of claims, including discrimination, failing to maintain the common elements, not enforcing the CCRs or not enforcing them fairly or equitably, failing to maintain reserves, and so on. You name it. This is not to say that all such claims always have merit, but, once someone files suit, for whatever reason, you still have to defend it.

I would not serve on the BOD without the association having Errors and Omissions (or D&O) policy. In the Dallas area it is typically referred to as D&O insurance.

Our E&O coverage is part of our general liability policy with SF, though it has to be elected and, natch, paid for.

Garry,

Look up Associations Insurance Agency on the web. They only write insurance for Homeowners Associations & Condo Associations, and I believe they are also appointed to write exposure in any state. Just ask for a producer and they should be able to connect you.

Sidney,

Telling the insurance company will do nothing for you. They have no power over your organization. And unless someone files a lawsuit the issue of coverage will not be considered. Part of the whole decision will be to take into consideration that the HOA and the defendant board member will in turn sue the insurance company.

Consider that most lawsuits are settled long before they appear before a jury. And there if the insurance company thinks they can settle for less then they figure it will cost to fight they will do just that.

"Errors and Omissions" (E&O) and "Directors & Officers" (D&O) are two different types of insurance coverage.

E&O Coverage is for liability resulting from errors or omissions in the performance of professional duties. Applicable as a general rule to professional business activities such as banking, accounting, law, insurance and real estate. Your management company should carry E&O insurance.

Every association should have D&O. Even though your documents may state that board members are indemnified, that may not extend to other volunteers such as committee members, who could be named in a lawsuit. D&O usually extends to volunteers in addition to the board. Also, lets say a lawsuit is brought against you after your term of office is over. The current board may not decide to indemnify you until after the trial, leaving you to front all legal costs - D&O usually defends from the first dollar. Simply put -do not serve on a non-profit board that does not provide D&O coverage, that protexts you while you serve, and after you leave office and, some policies will pay off if you lose a suit, but you will have to pay the litigation costs in the meantime. You want a policy that includes indemnity coverage for the cost of defending actions against you, and you want to make sure the policy specifies that the coverage limit does not include the defense costs; otherwise, legal expenses could eat up most of the coverage you have, leaving little to pay any judgment levied against you. Boards should also be aware that the D&O coverage many companies include as an endorsement in the insurance packages they offer community associations don’t typically cover non-monetary claims (for board election challenges, architectural review decisions, rules enforcement, and the like, which represent the majority of the liability claims most communities are likely to file. A mono-line or stand-alone policy is more expensive, but it will cover these non-monetary claims.

Make sure you know exactly what is and isn't covered and for how much - get your insurance agent in to show you, in the policy, the coverages and limts.

Joe

Kirk....I just received the great news that this disfunctional President has resigned...While this is what the few HO's that live in our community wanted and that I have been fighting for for 2 3/4 years.

I have said all along, that I didn'y want to hurt the HO's or the community in any way especially financially. This President has placed us in such a financial mess. Having her resign still will not erase the many things she has done to our HO's or community. The HO's don't know the situation the Association because she has never send a news letter or any financials. If you didn't come to the meeting, you received nothing....There is nothing we can do about about the Reserve fund that has not been funded since Apr.07 or the hiring of every vendor being more costly then the last. She has locked us into a 3 year contract w/the also disfunctional PM. (the one who doesn't have a CAM license) As I have stated in another post, I did send in a complaint to the DBPR. I sent copies of all her mistakes, the tax return filed late, using vendors w/no license or insurance, not seeing that the Reserves were funded or at least seeing that the HO's were informed. She should know the FL SS inside and out and know that once the Reserves were funded, they only way to stop them is through a HO vote....She should have also know that there must be a collection policy written and notice sent to HO's. We have no policy and at the last (March 31st) Board meeting the President, her clones and the PM decided to charge a late fee plus interest and make it retro to Jan....Shouldn't a PM know this?...Though some HO's paid late, they had still paid before the Board made this decision. They were charged a late payment anyway....Please all pray that the DBPR will do something about this and we can get out of our 3 year contract.

The lawn service (friend of PM)the President and her clones voted in at $5,000. more per year than we were paying. Again, let me remind you, there is no money to meet these expenses (this is why no Reserves, they took the $10,000. to pay bills)..This is the worst lawn service we have ever had. They have done our lawn 3 times, three times have received complaints. 1)after three (3) days of rain and still raining, they cut the grass, leaving large ruts in the yawn. 2)they missed cutting serveral yards (one being mine)I found him and told him to come back, he did, he cut my entire back yard w/a weedeater. 3)Wish I could send pictures, they cut the grass so low and the mower out of line, that it was down to the dirt in some places and near scalped on one side of every swipe w/the mower..So hopefully we can get rid of this new company too.

The PM has e-mailed the Board w/this resignation information and told the VP, he is now President. As stated before, he lives in Mass.

I'm open for any suggestions that can help us pull our community out of this mess....And Kirk can I now sue this past President w/o costing the HO's or Association....Sorry, I went on so long.

Old thread. Best to open a new one if want to add anything.

9 YEAR OLD THREAD, ROGER