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When Homeowner Association D&O Insurance Won't Do Share
All wise community associations should carry D&O - Directors and Officers
liability insurance which provides coverage in the event of a lawsuit claiming
some Board act or omission caused harm. D&O insurance does not, however, cover a
director or officer who is hurt while on the job. For example, if a Board member
climbs on the roof to inspect it, falls and gets injured, there will likely be
no insurance coverage for medical bills or lost wages. This is because directors
are typically not required to climb on roofs as part of their job.
A typical D & O liability policy protects the association when someone makes a
claim for monetary damage, not property damage or personal injury, arising from
the negligent actions of the Board. Claims for personal injury or property
damage usually fall under the association's general liability policy. The
insurance company is required by the terms of the insurance policy to defend
such a claim and to pay any settlement reached or judgment entered due to the
association's negligence. Payments are capped by the policy limits less any
applicable deductible.
Some general liability policies have "Medical Payments" coverage regardless of
who is at fault, however, most policies exclude claims for medical payments to
the "insured" and generally define the "insured" to include officers and
directors.
Also, since directors and officers are rarely deemed to be association
employees, they would not generally be covered by workers comp insurance.
Before an association is liable for an injury suffered by a director or officer,
it must be established that either:
the association directly caused the damage,
required the director to perform the task which injured him or,
was negligent in some way that the director was injured. In the example, the
association did not act in a negligent manner and, therefore, has no liability
to pay for the director's medical expenses.
One final consideration. D&O coverage will NOT protect Boards that knowingly
violate the governing documents or state law. For this reason, it is very
important that all board members review and become familiar with them. Ignorance
of the documents or law is no excuse.
Understanding the scope of association insurance coverages is an important part
of serving on the Board. If it has been a while since the policy has been
reviewed, invite the association insurance agent to attend a board meeting to
explain the coverages and ways to improve it.
Source: Richard Thompson: For more information on this subject, see
www.Regenesis.net. |
