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Directors & Officers

Directors & Officers (D&O) coverage is a liability coverage meant to protect a community's volunteers and employees from being held personally liable for decisions made in good faith for the association.

Why is it so important?

To be brief, this coverage gives homeowners the protection and courage to serve their communities on the Board without being held personally liable for decisions made to better the communities.

What are the proper limits of Directors & Officers insurance?

Per California Civil Code Section §5800, an association needs to maintain at least $500,000 in Directors & Officers coverage if the association contains less than 100 units. If the Association has 100 or more units, the board of directors must carry coverage in the amount of at least $1,000,000.

So, with the right amount of insurance, no Director can be personally liable?

As per California Civil Code §5800, board members can be held liable above the statutory limits if board members own more than two units within the association or if the community is mixed-use. If a board member owns more than two units within the community or the community is mixed-use, it is very strongly recommended that the association carry a higher level limit of umbrella liability coverage to ensure adequate protection.

What about decisions not made in good faith?

The D&O policy will never cover decisions that the board makes that it knows is wrong before making them. That is gross negligence, and will not be covered by the association's policy.