PA 215-996-9966 / NJ 908-237-3655

680 Sycamore Drive, Warminster, PA 18974 / 79 US Highway 202, #301, Ringoes, NJ 08551




April 23, 2020| Lester Yat

It can be a thankless job — often yielding more complaints than compliments, requiring long meetings and creating piles of paperwork. But someone has to do it.

Fortunately, in most communities there are committed, dedicated volunteers willing to step up and fill those all-important seats on the board — and hard-working, diligent managers determined to carry out the board’s requests and keep the community running smoothly.

But while those folks — volunteers and professionals —  are prepared to spend their evenings in meetings and countless hours looking out for the interests of the community, they shouldn’t be expected to put themselves, and their personal finances, in danger when making decisions.

Board members are legally required to carry out their duties in the best interest of the community they serve. This fiduciary duty, though, can make even the most stalwart volunteer nervous, especially in today’s litigious atmosphere.

Fortunately, there are insurance policies designed to protect board volunteers and professionals.

It’s essential that boards be covered by a Directors & Officers (D&O) insurance policy — and that the policy be reviewed annually. D&O insurance covers board members against legal action if they are performing their duties in a reasonable manner. . The coverage is designed to protect trustees against claims brought as a result of their failure, or perceived failure, to carry out their fiduciary obligations.

A D&O policy also provides coverage for legal defense costs and settlements resulting from those claims. A comprehensive D&O policy will also cover the property manager and will provide coverage for both monetary and non-monetary damages, as well as employment-related claims.

What could a condo or co-op board do, you might ask, to incur a lawsuit? The list of complaints against boards, insurance experts say, is a long one.  Boards and individual board members have been sued for conflict of interest, pet policies, mismanagement of funds, discrimination … and more.  And whether or not the complaints have merit, lawsuits can be expensive to defend.

But the essential insurance doesn’t stop at the board. Managers need to be covered, too. Community association managers’ Errors & Omissions insurance will help protect the pr​operty manager against bylaw litigation filed by homeowners, while including coverage for punitive damages.

When residents are willing to get out in public and do their best to perform their fiduciary duty, and managers are working every day to keep buildings running smoothly, they shouldn’t have to do it without a safety net.