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The purpose of this is to provide coverage for claims alleging losses arising from mismanagement or wrongful acts. A wrongful act means any breach of duty, neglect, error, misstatement, misleading statement, omission or other act done or wrongfully attempted by the association.
Your association’s Directors and Officers coverage should include management decisions made by the past, present or future directors, officers, trustees, employees, committee members, volunteers, or property management company employees of your association.
All Directors and Officers policies are not as comprehensive as others. Here is a list of possible coverage problems to look out for with some Directors and Officers policies;
1) Defense Costs included in the policy limit – They should be in addition to the policy limit (Outside)
2) Does not cover Non-Monetary Damages – Examples include but are not limited to;
A) The Board’s failure to maintain common areas
B) The Board’s failure to adhere to association By-Laws
C) The Board’s failure to properly disburse funds
D) The Board’s failure to give the proper notice of elections
E) The Board’s failure to accurately count votes/proxies
F) The Board’s improper removal of other board members
G) The Board’s improper levying and application of assessments
H) The Board’s improper granting of easements
I) The Board’s or the architecture committee’ improper approval of variances
J) The Board’s decisions that result in physical damage to the association’s property
3) Does not cover acts of the property manager
4) Does not cover acts of Non-Board members (like volunteers, committee members, and employees)
5) Does not cover the failure to maintain or obtain insurance (this requires defense cost coverage)
6) Does not cover discrimination & fair-housing claims
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