Directors and Officers Liability
By Wendy Light, CIC

Congratulations! You’ve volunteered and have now been elected to your housing cooperative’s Board of Directors. Your civic duties will be rewarding but could be a source of unforeseen liability. Disgruntled shareholders in your cooperative may not be appreciative of your efforts and decisions while on the board or acting as an individual officer.
Most likely, your housing cooperative has a Directors and Officers Liability policy in force. Directors and Officers Liability coverage may also be referred to as:
Habitational Association Directors and Officers Liability
Condominium or Homeowners Association Wrongful Acts Coverage
Executive Protection Coverage or Community Association Liability

The purpose of Directors and Officers Liability is to defend the current or former board members against claims or suits of:
Breach of Duty
Actual or Alleged Errors
Misleading statements, acts or omissions
Directors and Officers insurance does not cover damages for bodily injury or property damage. Besides providing for defense, the Directors and Officers policy should provide for both monetary compensation and non-monetary damages.
Some examples of the potential for claims under the Directors and Officers Liability could be from decisions concerning:
Interpretations of the By-Laws and Covenants
Pet Policies
Security Policies
Responsibility for building repair and maintenance
Fund Maintenance
Failure to maintain property values

Since there is not a standard Directors and Officers policy in use today, coverage will vary between insurance carriers. Some policies will combine the Directors and Officers Liability with Employment Practices Liability and/or Fiduciary Liability. This type of policy can be extremely beneficial in a crossover claim that involves more than one type of coverage.

As with any insurance policy, the conditions and exclusions of each policy should be carefully reviewed. Your Insurance Agent and Property Manager can help your Board decide what coverages, policies and insurance carrier suits your housing cooperative best.

Wendy Light, CIC is an Agent with Smith Peabody Stiles Insurance Agency, Fenton, MI 48430

Volume 1 Issue 6