The Importance of Directors and Officers Insurance for Condo Associations

Condo Associations

Every condo association is comprised of its individual board members and not the management company that handles its day-to-day administrative tasks. Individual board members can face personal liability for claims against the association, so it’s imperative that an association safeguard its board members with directors and officers insurance.

Vital Financial Protection

The purpose of condo directors and officers’ insurance is to provide protection to board members in the event that they are subjected to a legal claim. If an association doesn’t have insurance or funds to address a claim, individual board members may be appealing defendants and could be personally liable for a damages award and legal costs.

Coverage That Matches The Duty of Board Members

Serving on a condo board requires assuming a fiduciary duty on behalf of an association’s unit owners. They have to manage the building’s finances and activities with a high degree of care. Any alleged breach of that duty can serve as the basis for a claim against the association or its individual board members. In order to recruit and retain a qualified board, a condominium needs to be prepared to ensure its members in a manner that corresponds to the duty being asked of them.

Ultimately, anyone serving on a condo board should ascertain that the association has adequate directors and officers policy.

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