The Down-Low on D&O What It Is and Why You Need It

Members of co-op, condo and HOA boards often give a great deal of their personal time to make decisions in the best interest of their association, cooperative or condo community. These volunteers are charged with protecting the community they live in, as well as their own and fellow residents' investments. But as hard as they work, board members are human, of course—and it's almost inevitable that they will make mistakes from time to time.

But what protects individual board members if an honest mistake or administrative misstep loses the association money, or results in a lawsuit from an association member? If the cost of a judgment against a board—no matter how honest the mistake that caused it—was taken directly out of the board members' pockets, who in the world would ever serve on a building or HOA board in the first place?

The answer to this conundrum is Directors and Officers coverage—D&O for short. It's insurance that offers protection to board members so they are not held personally liable when trouble arises, and it's something no board can really do business without.

The Basics of D&O

"Directors and officers insurance provides liability protection for economic loss resulting from business-related negligence or wrongdoing on the part of board members," explains Karim G. Kaspar, a senior counsel with the law firm of Lowenstein Sandler in Roseland. "D&O policies generally protect individual directors and officers from losses not indemnified by the company and reimburses the insured for amounts that it is obligated to pay on behalf of its directors and officers for claims made against them."

"D&O insurance generally covers members of the board of directors," says Wayne G. Dow, Esq., director of underwriting at Kevin Davis Insurance Services in Tampa, Florida, a company specializing in community association insurance. "The president, vice-president, treasurer,


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  • I am a board member. A homeowner is threatening to sue me because he had his boat illegally parked in another's drive and I took a look at it and tried to get the board to act. The tenant of the home with boat sitting in drive attempted to get moving vans in drive and had to move the boat. I did not move the boat, someone else did, but since he doesn't know who did, he is threatening to sue me (damage to tire). Will I be covered under our D&O? President wants me to resign and will not give me the policy to read. He is teamed up with boat man and they are trying to get me to resign. If I resign, will I still be covered?
  • if you'd like to do a follow up, contact me altho I am in Ca. our policy excluded non-damages lawsuits (asks for compliance only) with DISASTEROUS consequences
  • Excellent article, concise and well-written. (And this is coming from someone in the insurance industry).
  • My association sued for breach of contract regarding a roof replacement. We won summary judgement against the Board and were paid our attorney fees, but we were accessed $1,000 to cover all of the legal fees. I believe the president was negligent in his knowledge of the restrictive covenants and would like to recover my $1,000. Can I/