Common Exclusions. Some of the common exclusions under CGL & D&O policies include:
- Breach of contract
- Election challenges
- Dishonesty, criminal acts, fraud
- Embezzlement (HOA can be covered by fidelity insurance but not the embezzler)
- Sexual misconduct
- Employment claims (HOA can be covered by EPL insurance)
- Underinsured or failure to insure
- Punitive damages, fines, penalties
General Liability. Exclusions are perils, losses, and property not covered by the policy, such as wear and tear to the association's common areas or mold. Excluded perils might also include perils that could cause extensive damage, such as flood, earth movement, and nuclear radiation.
Directors & Officers. Not all exclusions are necessarily bad for the Association. For example, what if a minority of directors act contrary to the majority rule and the board needs to file an action to stop them. If the D&O policy removes the insured v. insured exclusion, the rogue minority board members who are clearly violating their obligation will be defended under the D&O policy while the association must pay to prosecute the action.
Endorsements. Boards should consult association's broker and legal counsel regarding exclusions in the association's insurance policy and if any of them should be covered with an endorsement.
ASSISTANCE: Associations needing legal assistance can contact us. To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter.