Why every board member needs Directors & Officers Insurance

As a board member, you're at the forefront of decision-making for your building. Your role involves taking calculated risks and implementing changes to benefit owners and residents. But what happens when a well-intentioned decision leads to unexpected consequences?

Directors &Officers (D&O) insurance is more than just a policy – it's a crucial safeguard for board members like you.

‍‍‍What is Directors & Officers Insurance?‍

D&O insurance is designed to protect you and your fellow board members as you make important decisions for your community. This coverage steps in when the unexpected occurs, providing support and protection against personal liability. 

Why Directors & Officers Insurance matters?

In today's world, where legal action is increasingly common, D&O insurance has become a vital tool for board members. Here's why it's important:

• Protection of personal assets: D&O insurance safeguards your personal savings and property if you're sued. Without it, a lawsuit could put your hard-earned savings, your home, or other valuable possessions at risk.
  
  
• Coverage of legal expenses: Legal battles can drain your wallet faster than a leaky pipe. Even if you win the case, lawyer fees and court costs can add up quickly. D&O insurance typically takes care of these fees.
  
  
• Peace of mind: With proper coverage, you can make decisions confidently, without constant worry about potential personal liability.
  
  
• Attracting and keeping board members: Good board members can be hard to find. D&O insurance makes the role more appealing by removing the fear of personal financial risk which encourages more people to volunteer for board positions.

Real-life scenario: When good intentions aren't enough

A resident's apartment was damaged by sewage from the unit above. The board had been proactive, hiring a plumbing company to address ongoing backup issues. However, the plumbers' work actually caused more problems, leading to the sewage flood. The association's insurance didn’t cover the damages due to a recent change in providers.

In the end, one of the board members was personally sued. Even though the board tried their best to fix things, they still got into legal trouble. This shows that problems can pop up even when a board is doing a good job. That's why D&O insurance is so important - it protects board members when surprises like this happen.‍

Understanding D&O coverage options

It's important to know that not all D&O policies offer the same level of protection. Many general insurance packages include some D&O coverage, but these policies often have limitations. They may not adequately protect against the most common lawsuits board members face.

For this reason, it's worth considering a dedicated D&O policy. While it may cost more upfront, the thorough coverage it provides can be invaluable if a lawsuit occurs. When it comes to protecting yourself and your fellow board members, investing in robust coverage is a wise decision.

Conclusion

As a board member, your role is crucial in shaping your building. D&O insurance isn't just about financial protection – it's about empowering you to lead effectively without fear of personal liability. Even when you're doing everything right, unexpected issues can arise. D&O insurance provides a safety net for these situations. Take some time to review your current coverage and discuss any concerns with your insurance provider. Your commitment to your building deserves the peace of mind that comes with complete protection.

‍