Rembaum’s Association Roundup | Jeffrey A. Rembaum, Esq., BCS | Visit HERE
When Directors’ and Officers’ Insurance Isn’t What You Think It Is | A Wake-up Call for Community Association Board Members
Over the last several months, I have encountered several situations in which condominium and homeowners’ association board members were shocked to learn the true nature of the directors’ and officers’ liability coverage they believed was designed to protect them. In each case volunteer board members were named individually in lawsuits filed by dissatisfied owners. Little did they know that after the claims were made, they discovered that the policy they had relied upon did not provide the broad protection they assumed existed.
These board members believed they had purchased traditional directors’ and officers’ liability insurance. Instead, they learned that the policy functioned more like a limited legal defense program than a comprehensive liability policy. The distinction can be significant. When a board member is sued, the expectation is often that the insurance company will not only provide a legal defense but may also cover litigation-related expenses and, when appropriate, pay settlements or judgments. Yet many policies contain extensive limitations, exclusions, conditions, and reimbursement obligations that can dramatically restrict coverage.
Read the full article HERE