Condo board members
Are you protected?
Susan joined her association’s condo board as she wanted to contribute to the community. No good deed goes unpunished! Karen was a unit owner who never agreed with anyone. At one association meeting, the board voted to make certain maintenance related improvements and spend other funds for various upgrades to the property. Karen disagreed with the new plans and filed an action against the board, including naming the Board members individually. Karen alleged that the plans breached the board members fiduciary duty and went beyond the authority provided by the associations’ bylaws. As with the rest of the board, Susan was individually named in the suit.
Susan was lucky, as her condo association was smart enough to have purchased a directors and officers insurance policy. Her association had realized that the board members make many decisions throughout the year that affect all the residents. Even using their best judgment in determining how to use Association funds for repairs, maintenance and improvements, it is not uncommon to have these decisions disputed by association members. The Board and its members can rest easy at night as directors and officers insurance will be there to defend and protect the association and the board members in the event of certain disputes.
Generally, directors and officers insurance cover such things as the mismanagement of association affairs, failure to maintain adequate reserves or records, and failure to enforce condo association rules and regulations. Some of the most frequent claims made against associations and their members include breach of fiduciary duty, breach of contract, non-employment discrimination, employment practices disputes and wrongful foreclosure. Policies, subject to their specific terms and conditions, will respond to defend the association and the individual directors. At that point, the directors and officers policy will pay expenses to defend the board and individuals, as well as any settlement amount or judgment that might be incurred.
Regardless of the size of your condo association, if you are on the board, you are individually exposed for the decisions that you make while administering the association bylaws and while making management decisions. Don’t go unprotected. Look into purchasing a directors and officers policy for your condo association today.
Slaton Risk Services & Socius Insurance Services
5713 Corporate Way , West Palm Beach, FL 33407
Tel: 561-683-8383 ext: 1649