Holding a position on a condo board is likely to involve a significant volume of work. Boards are responsible for virtually all of a condo association’s financial and managerial matters. Both prospective and current board members should verify that the association carries adequate insurance to protect them individually.
Why Do Board Members Need To Protect Themselves?
Many states’ laws governing the management of condo associations prohibits board members from receiving compensation for their service. However, board members have a legal obligation to serve the condo’s membership with a fiduciary level of care. A claim against an association can result in personal liability for board members.
How Does Directors and Officers Insurance Help?
Directors and officers insurance for condo associations can help board members in a way that general liability cannot. It can help if there is a claim against the association and its directors for fiduciary negligence, a conflict of interest, or failure to maintain the condition of the premises. It is somewhat like professional liability insurance that indemnifies board members against personal liability in a lawsuit.
Even if a condo has professional management, the association and its directors are the likely target of any legal claims. Associations need to protect their boards so that their directors will be willing to serve and can do so effectively.