Adams Stirling PLC
Menu

D&O INSURANCE REQUIRED

QUESTION: Our HOA has been paying $2,669.00 per year for $2 million D&O liability coverage. I recently read that volunteer officers cannot be sued for anything other than fraud. Our past 8 years of coverage has cost over $16,000. Is this necessary?

ANSWER: Yes it's necessary. Homeowners seem to sue their boards on a fairly regular basis for some of the silliest reasons. Even though the business judgment rule protects directors from personal liability for mistakes in judgment, they still need Directors & Officers (D&O) insurance to defend them when they are sued. Litigation is quite expensive and unless your association has a lot of extra money to spend on lawyers you should buy insurance. Not only is it prudent but you may not have a choice since most governing documents for associations require D&O insurance.

ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.

Adams Stirling PLC