Protecting Self & Staff Don’t Skip the Liability Coverage!

Ahhh, lawsuits. People suing people. Companies suing companies. People suing companies. Residents suing boards. A quick surf of the Internet and you can find many instances across the country where condo boards are sued. You can also find multiple lawsuits in which boards are sued for possible misappropriation of funds. Lawsuits are scary and potentially financially damaging—but the good news is that there a special insurance—called directors and officers liability insurance—just for boards that protects them against this possible litigation.

“D&O insurance is liability coverage to protect trustees against claims brought as a result of their failure to carry out their fiduciary obligations,” says Jeff Grosser, vice president and partner of Rodman Insurance Agency, Inc. in Needham, Massachusetts. “The policy provides coverage for defense costs and/or settlements resulting from those claims. The more comprehensive D&O liability policies include the managing agent as additional insured and provide coverage for both monetary and non-monetary damages as well as employment-related claims.”

Joel Meskin at McGowan Program Administrators in Fairview Park, Ohio, says that to understand D&O insurance, think of a puzzle. “The community association insurance puzzle is made up of a number of policies,” he says. “The genesis of the D&O coverage is to provide two protections: First, to defend a claim. Second, if the board member, the board or the association is found liable by judgment or a settlement is determined to be appropriate, to pay those amounts on their behalf.”

Directors & Officers Insurance

Is D&O insurance required? “Condominium documents usually provide that the board of trustees will obtain liability insurance that covers the trustees, i.e. D & O coverage,” says Michael Phillips, chief operating office at The Copley Group in Boston, which manages about 20 associations representing nearly 2,000 condominium units in Eastern Massachusetts. “Minimum amounts are usually specified and the documents usually empower the board of trustees to obtain such other insurance as they consider necessary.”

But this isn’t always the case. “The ‘Insurance Section’ of the condominium bylaws does not always specify that the board must carry D&O liability coverage specifically,” says Grosser. “However, there are typically requirements with regards to the scope of property coverage and the need for other coverages including General Liability, Crime, Workers Compensation and Flood. Crime coverage protects an association against the dishonest acts of its trustees and/or its managing agent (if added by endorsement). The coverage is required by both mortgage lenders and Massachusetts condominium law.”


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  • Who protects the unit owner from negligent trustees and management company ? Who can help the unit owner who's unit is so badly damaged from years of water damage that contractors hired by unit owner to perform interior work refuse to further warantee their work until the exterior source of water is addressed ? . Who protects the unit owner when private condo insurer will no longer pay out claims which has cost the owner $1,000 in repeated deductibles for the same claims because the source of the problem, exterior common area negligence and the Trustees refusal to make repairs ? City inspectional services cites the association who pretends to do the work and city services believe them and refuse to follow up becuase "we don't do condos" althought the association has been cited multiple times for health and safety infractions against statute. Who is on our side ? No one, nor are there any services or laws protecting senior condo owners and disabled condo owners who's unit has been destroyed by chronic water infiltration and mold.
  • I own a second floor unit in a two-story condo building. After a harsh winter, because of an ice dam I had torrents of water coming through my bedroom oversize window. Fortunately, the damage was not extensive, but I did report it to the condo board. A few days later I began to find ceiling stains and cracks throughout my unit. I informed the condo board and provided photos. It has been over three months and my calls are either ignored or I am told that they are still trying to get a roofer to inspect. Two weeks ago we hired a property management company who unbelievably also claim they are still trying to get a roofer to inspect the damage. Is the association responsible for the water damage to my unit (which increases every day), since they have neglected to take action? Do I need a lawyer?