Community associations, such as homeowners’ associations (HOAs) and condominium boards, are responsible for managing shared resources, enforcing rules and overseeing the well-being of their communities. However, with these responsibilities come significant risks often not realized by those kind enough to volunteer for the board. Directors and officers (D&O) liability and employment practices liability (EPL) insurance are essential tools to safeguard associations and their leadership from costly lawsuits and claims.
D&O
This type of coverage protects board members from lawsuits related to decisions made on behalf of the organization. Without this coverage, board members personal assets can be at stake, even when acting in good faith. Defense costs are often costly in trying to settle disputes between members or the board.
One key area of exposure for community associations is breach of contract. For example, a vendor might allege the association failed to uphold a maintenance or service agreement, leading to a lawsuit. Even if the claim is unfounded, the legal defense costs can be significant.
Another common risk involves nonmonetary claims, such as disputes over enforcement of community rules. Homeowners might sue the board over decisions regarding architectural approvals, rule enforcement or access to common areas. These claims, while not involving monetary damages, still require legal defense, which can quickly strain an association’s budget.
EPL
The type of insurance protects against claims related to employment matters, such as discrimination, wrongful termination or harassment. While community associations may not always have traditional employees, they often rely on contractors, vendors and volunteers. EPL coverage extends to protect against lawsuits arising from these relationships.
Third-party harassment and discrimination claims pose another significant exposure. For instance, a resident, contractor or vendor could allege they were subjected to harassment or discrimination by a board member or another resident. These claims can lead to costly settlements or judgments, as well as reputational damage to the association.
Learn more about USLI’s Community Association Directors and Officers Liability product and get a quote today.
3 Ways to Quote
ONLINE SNAP.USLI.COM
PHONE 888-773-8754
EMAIL PROFESSIONAL@USLI.COM
