Those who manage a homeowners association may be at risk for legal litigation by residents and others due to their management of the homeowners association. Directors and officers insurance can be a type of wholesale HOA insurance which can cover the costs and damages due to claim or lawsuit for wrongful action against the officers of a homeowners association. While most lawsuits against HOA officers are due to financial conflicts, officers of a HOA may be found liable for breach of legal duty, failing to disclose a conflict of interest, misrepresentation, or commingling personal and HOA funds. Many types of D&O insurance can provide coverage for regulatory and criminal investigations, defense costs, and other legal damages.
While directors and officers insurance is primarily to protect the directors and officers, it is usually purchased by the company wholesale for those leaders. Some classify D&O insurance as a type of management liability insurance. D&O insurance can be customized to the size and needs of the homeowners association and its leaders. One exclusion common to directors and officers insurance policies includes intentional illegal acts or profiteering. Another less common exclusion is lawsuits by a director or officer of the company itself to prevent collusion, except in certain cases listed in the policy. A wholesale HOA insurance professional can help your homeowners association choose the best directors and officers coverage.