It sits quietly in your condo association’s insurance package, unremarkable next to the fire, flood and other forms of mayhem that make insurance policies necessary fixtures in association budgets.
Looking at the file labeled “directors and officers” (D & O) insurance, new members on association boards may wonder exactly when or how D & O insurance would ever be utilized. Compared to all the risks of property damage, it may seem like an superfluous add-on, but D & O may be the one insurance product that gets the most use. All it takes is one disgruntled unit owner who decides to take a complaint to court.
Even when residents’ complaints may seem frivolous or downright wacky, they can provoke a court action, and the target is likely to be unsuspecting volunteers serving on a board of directors. “Nowadays, [the use of D&O insurance] happens all the time, whether it’s over rules enforcement, fiduciary duties, discrimination… it can be anything,” reports Attorney Charlie Perkins of the law firm Perkins & Anctil, PC, in Westford, Massachusetts. “I don’t know why anyone would volunteer on a board without it.”
He notes that even though the vast majority of these cases reach a settlement and never make it to court, “the D & O insurance covers the costs of defense.”
Joel W. Meskin, Esq., CIRMS, vice president of community association products at McGowan Program Administrators in Fairview Park, Ohio, recalls a case that had to do with service animals. “There was a unit owner in a high-rise condominium, who was warned that she had too many dogs—in violation of the condo rules. She had a note from her psychiatrist saying she needed to keep ten poodles… as companion animals. She sued the association board for failing to provide her with a reasonable accommodation.”