Directors and Officers Liability Insurance (D & O Insurance) - Condo Associations in Quincy, Mass.
Condo associations normally purchase property, general liability, and crime insurance for their condominium association. Another type of insurance that's highly recommended is Directors and Officers Liability Insurance (D&O Insurance). D&O insurance is basically Errors and Omissions Insurance for the trustees of the Condo Association while performing duties on behalf of the condominium association. Lawsuits against the trustees can originate from either from a decision made by them or simply inaction.
The responsibility of the board of directors is to make decisions in the best interest of the condo association. We all know this is not a perfect world and all decisions will not have universal support. Therefore, some unit owners may not agree with decisions made and if they suffer financial consequence and feel wronged they could bring legal action against the Board. That's one situation of where a lawsuit can originate. D&O insurance provides the coverage or protection your association would want to have for your directors, officers, or trustees. Even if the person suing the directors, officers, or trustees is completely wrong you still want to have the defense costs paid for by your insurance. Since the trustees volunteer their time to help your community, they shouldn't have to bear the risk of their personal assets. Personally, I wouldn't serve on a Condo Association Board without this protection!
An example: the condo association allows for a porch to be built onto the exterior of a second story unit. The first story unit owner living below no longer has the beautiful view it once had. Now the first story unit owner feels his property has been devalued and want to be made whole. Who does he sue? The directors, officers, or trustees who permitted the porch to be built. This would not be a covered claim in your standard condo association insurance policy. The condo association would need to have D&O Insurance to have coverage which will pay for the defense cost of the lawsuit and a settlement, if necessary.
Unit owners or tenants can bring lawsuits going after monetary or nonmonetary aid. Some D&O Insurance policies provide coverage for only monetary relief while others provide coverage for both. D&O Insurance policies are relatively inexpensive as claims are not as common as property or general liability claims. Talk to a local independent insurance agent who can help you figure out what is in the best interest for your condo association.
Call us @ 617-471-5010