If you’re currently on the Board of Directors for your Homeowners Association (HOA), Property Owner’s Association, Condominium Association or Townhome Association in San Antonio, Schertz, Seguin, New Braunfels, Universal City, Cibolo, Boerne, Helotes or Bandera  TX, you need to have Directors and Officers Insurance.  This insurance protects the board members from personal liability.  All associations, whether they are under developer control or homeowner control, should carry directors and officers insurance.  Board members can be held personally responsible for acting on behalf of the association. For this reason, most board members demand that they be protected from claims being filed against the association and the board. 

Also, homeowner board members are volunteers and may not be willing to serve on a board of directors if they are not personally protected from liability.  Please note, however, that directors and officers insurance typically will not cover a claim of discrimination of any kind.   If a homeowner files a claim of discrimination against the board of directors, typically the association will be responsible for paying any legal fees to defend the board and any judgments that may be awarded to the opposing party. 

So, what are the top ten D&O claims for homeowners associations and condo associations?  They are listed below*.  Take note and see if any of these situations sound familiar in your HOA:

1)      Board’s failure to adhere to By-Laws

2)      Board’s failure to properly provide notice of elections

3)      Board’s failure to properly count votes/proxies

4)      Challenges regarding power granted to the Board by the By-Laws

5)      Improper removal of Board Members

6)      Decisions by a Board resulting in physical damage to association property

7)      Challenges to assessments

8)      Approvals and declinations of variances (generally by an architectural control committee

9)      Breach of fiduciary duty

10)   Challenges to miscellaneous decisions of the architectural review Board

If you’re on the Board of Directors for you HOA and are unsure if you have D&O coverage, ask your Community Manager.  If you do have coverage, ask for a copy of the policy.  If not, contact an insurance broker or company that specializes in D&O insurance for Homeowners Associations.  A basic Board Member D&O policy will not cover all aspects of HOA claims.

Spectrum Association Management is a homeowners association, condominium association and high rise association management company serving Dallas, Fort Worth, San Antonio, Houston and Austin areas. To learn more about Spectrum Association Management visit us at http://www.spectrumam.com/ or to request a quote for management click here. Also be sure to “like” us on Facebook by clicking the following link: http://www.facebook.com/spectrum.association.mgmt.

*Top Ten information taken from McGowan Program Administrators Risk Management Series.