HOA and association insurance for boards.

An association policy has two halves that get very different amounts of attention. The master property and liability programme protects the common property, and boards generally understand it. Directors and officers cover protects the volunteers who run the association from claims about their decisions, and it is the half most often underbought.

Directors and officers cover for volunteer boards

Boards make decisions about assessments, enforcement, architectural approvals and vendor contracts. Owners who disagree can and do bring claims, alleging breach of fiduciary duty, selective enforcement or failure to maintain.

D&O cover pays the defence and any damages. Without it, individual board members can find their own assets in scope. For a volunteer role, that is a significant thing to leave uninsured, and it is the cover boards most frequently discover they needed too late.

Where the master policy stops

The governing documents define the boundary between association responsibility and owner responsibility — bare walls, single entity or all-in. That boundary needs to be reflected accurately in the master policy, and communicated to owners so their own HO-6 policies start in the right place.

Getting this wrong produces gaps that only surface during a claim, with the association and an owner each pointing at the other. Reviewing the declarations against the governing documents periodically is worth the hour it takes.

Fidelity cover and association funds

Associations hold reserve funds, often substantial ones, and those funds are handled by volunteers and management companies. Fidelity or crime cover protects against theft of those funds, including by a managing agent.

Many governing documents and lender requirements specify a minimum fidelity limit tied to the reserves held. It is worth checking the current limit against current reserves rather than a figure set years ago.