Most HOA Boards are made up of volunteers, and homeowner volunteer decisions are protected by the Directors & Officers insurance policy. These are the most common claims facing associations’ Boards of Directors.
- Violation of the Governing Documents
- Rules should be enforceable and enforced
- Meetings should be held per the documents
- Architectural Guidelines should be followed consistently
- Breach of Fiduciary Duty. This happens when contracts are awarded without a quoting process, for example. Decision makers do not have to choose the lowest price, but they need to have a fair and equitable process of receiving quotes and awarding contracts. Any potential conflicts of interest should be disclosed, and when necessary, decision makers should recuse themselves from votes where there is a conflict.
- Not allowing comfort or support animals in common property
- Inconsistent rule enforcement – or different rules for tenants versus owners
- Employment practices
- Towing. Our resort communities have limited parking spaces and towing is very common. Maryland has regulations and the Town of Ocean City has specific guidelines that must be followed in order to tow a vehicle. Even following all the guidelines, the owner of the vehicle may still file suit against the association for improper towing.
Every decision of the Board can cause issues that members of the community do not agree with. It is imperative that those members volunteering their time are protected from personal liability from these decisions. A Directors & Officers policy provides protection against these common claims and other errors and omissions made by volunteers serving on the board.
It is also a good idea to make sure your Umbrella policy sits over the Directors & Officers policy to increase the available limits of liability.
Want to be sure? Give us a call and we can discuss your association’s need for Directors & Officers coverage.