Directors and Officers Insurance for Condo Associations
Are Your Board Members Exposed To Lawsuits?
Directors and Officers insurance coverage helps to protect the Condo Association’s board members from legal action brought against them for alleged wrongful acts while performing their duties for the Association. Despite being volunteers, condo board members can be vulnerable and their personal assets can potentially be at risk.
What Sort Of Insurance Coverage Do Board Members Need?
In our opinion, Directors and Officers coverage is an important part of any Condo Association's insurance program, and choosing the right insurance is a decision that should not be based solely on cost.
Did you know once you are no longer serving on the board you still have the potential to have a wrongful act claim brought against you?
Almost all Directors and Officers coverage is written as a claims made policy. This is significant, as it indicates that both the claim and the incident that caused the claim must be made during the policy period. So if your policy runs from January 1st, 2015 to January 1st, 2016, the incident and the claim must both occur during that period.
So what happens if an incident of a wrongful act happened five years ago and a claim is made today? This can be covered if you have tails coverage on your policy taking you back to a certain date, or an inception date prior to the five year time period. This type of coverage varies from company to company. If you have changed to a different carrier, you may be exposing your board to prior acts that may not be covered. Some carriers offer full prior acts coverage to help prevent this potential gap in coverage.
Does your agent offer you a quote that includes full prior acts coverage?
Another important coverage that can be added to your directors and officers coverage is Employment Practices Liability Insurance coverage (EPLI). EPLI is liability coverage for claims related to employment in the workplace, such as harassment, wrongful termination, discrimination, and retaliation. You may think that if you do not have any employees you have no exposure to this type of claim. This is one of the fastest growing types of claims we are seeing today and a claim can be made by an employee, volunteer, independent contractor, or vendor.
The exposure is real and the cost to defend if you do not have coverage is very expensive. The average cost to defend an EPLI claim is $150,000. If your Condo Association does not have this coverage as part of their Directors and Officers policy then you may be paying out of pocket for this type of claim.
Has your insurance agent offered you a directors and officers quote that includes EPLI coverage?
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