P.O.Box 8971 Cranston, RI 02920

(401) 228-8505

The importance of Directors and Officers Insurance

The importance of Directors and Officers Insurance


Why do HOA’s need Director’s &Officers coverage? Quite simply because HOA board members can make mistakes – and are often personally legally liable for them. Board members constantly walk a fine line, making tough and complex decisions with huge impacts on the basis of the sometimes limited information available.

A director or officer for the HOA can be held personally liable for their actions and decisions made for the association. Because of this, members of the association may be reluctant to serve on the board, fearing that their personal assets would be at risk.

The core purpose of a D&O policy is to help protect the personal assets of each director and officer from litigation due to actual or alleged mismanagement of the association or other alleged “wrongful acts” when acting in the scope of their managerial duties. The Directors and Officers liability coverage will also provide money to obtain legal counsel if needed. A D&O policy does not cover fraudulent, criminal or intentional non-compliant acts.

If the HOA employees someone, say to run the clubhouse, pool, or other facility in the community, this could expose the directors and officers of the board to possible employment practice lawsuits. Directors and Officers Liability Insurance may also include employment practice liability coverage.

Board member’s decisions have a great impact on the entire community and should benefit and protect the association and its assets. Each member of the board should take the time to review the insurance coverage to insure the association has the best coverage for the community and themselves.

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