When community association members cannot effect the change they want, they often blame the association board for their actions or inactions. Having a comprehensive Community Association Directors and Officers and Employment Practices policy can help protect the board and the association from costly litigation. Our policy is uniquely designed to meet the needs of homeowners and condominium associations with up to 1,000 units and $1 million in average unit value. We pride ourselves on stability, comprehensive coverage, competitive pricing and service.
Here are some examples of just a few coverage advantages, how they have helped associations and those who lead them. Log in to insurance.usli.com to see our eligibility and additional advantages.
- Defense costs outside the limit of liability and nonmonetary claims
- An association had a dispute over the use of its beach. Certain members felt the beach should allow access for all members and the public based on the town easements. Others felt the access should be private to the homes directly on the beach, and entrance to the beach should only be allowed at the town path. The demand was not a dollar amount, and those bringing the action did not want money. What they wanted was a ruling that the beach access would remain private. The association members were divided, and the town also brought a suit against the association. Due to the conflicting land records and multiple parties, having ample defense costs meant the association didn’t have to come up with the funds for the costly litigation, which often is derived from high member assessments when there is no insurance. It ensured the board’s ability to continue to provide member services and maintain the common area without a financial impact to the members.
- Defense costs for breach of contract
- An association vetted and hired a new landscaping company to maintain the common area of the homeowner’s association. The contract stipulated their scope of work which included grass cutting, fertilizing, maintenance of flower beds and common area trees for two years. After a few months and many calls to the landscaper, they realized they were not living up to the contract and not providing the proper services. The grass was long and the members were getting more and more frustrated. The board terminated their relationship with the landscaper noting that they breached the contract and did not uphold their end of the bargain. The landscaper filed a lawsuit stating they felt they were providing adequate services and the association was in fact the one that breached the contract. They demanded the full two years of pay. The defense expense was costly trying to prove which side was right.
- Third-party discrimination
- Members of the association had specific religious beliefs that included not having men and women in the pool area at the same time. One of the individuals on the board of the association made an executive decision to block off three hours on Saturday specifically for men and three hours specifically for women. The other members in the association complained that it was gender discrimination. Not knowing how to proceed, the board worked with defense counsel to help navigate the allegations of religious discrimination if they did not provide an accommodation and the gender discrimination coming from the balance of the community.
- Carvebacks to Insured vs. Insured exclusion for derivative actions, employment practices and former board members/committee members
- The board was at an impasse on whether the membership voting was in compliance with the bylaws for the election of the new board. Half the board felt the existing board should remain in control while the other half felt the new vote was legitimate and the newly appointed board should take over. The half that felt the board should remain in control brought a suit against the board members who did not agree and the association itself. They brought it derivatively (were not seeking to make a profit from the litigation but bringing it on behalf of the association). After much legal expense, the new vote prevailed, and the matter was settled.
- Lifetime Occurrence Reporting Provision
- The board of a condo association instituted a large assessment for needed building maintenance. They collected the funds but spent the money on updating the lobby with new furnishings. A new year came, and with that a newly voted in board. When the new board realized what money had been spent and what maintenance had not been done, they took measures to cut costs and issue another assessment on the members. The membership sued the former board and the current board for misappropriation of funds and breach of their fiduciary duties. When the suit was brought, the members of the prior board quickly learned that the new board had let their director’s and officers policy lapse, and they had no coverage. Due to this provision in the policy, former board members were able to report back to the policy from when they were on the board as the claim was due to their actions when on the board. This saved the former board from paying costly amounts in defending and settling the claim.
We can quote over the phone 888-773-8754, on the web or via email. You can also download a copy of our application.
