Good afternoon—and welcome to the board. Your mission should you choose to accept it is to make decisions to better your building. The residents may not like you and, more importantly, may not like those decisions. Nevertheless, keep doing the job you’re doing. In a worst-case scenario, you will be sued. Perhaps more than once. Should anything go wrong, don’t worry; you’re protected by the board's D&O insurance. Good luck.”
You volunteer to be on your co-op or condo association’s board. You do your best to help make the right decisions and make your HOA a great place to live. Unfortunately, one of your fellow residents doesn’t like a decision you made and takes you and the rest of the board to court. They are suing for thousands of dollars—maybe even millions. Your home, life savings and other assets are at risk if you lose.
With stakes like that, it would be virtually impossible for co-op and condo boards to find volunteers if there wasn't some form of protection from lawsuits resulting from the decisions made by board members in the course of doing their job. Fortunately, that protection exists, in the form of Directors and Officers insurance—D&O for short.
Some people think that it's only the board that initiates the lawsuits when homeowners are late with dues, or because they broke the rules, but lawsuits are a two-way street, says Kevin M. LaCroix, Esq., executive vice president of OakBridge Insurance Services, an Ohio-based insurer with clients in New Jersey and New York.
“They can be sued by members of the HOA and by third parties who provide services or goods to the association,” says LaCroix. “There’s no reason to serve on a board and face risk of potential liability without adequate coverage.”