Volunteer officers and directors are afforded various protections against personal liability. Such protections are necessary otherwise it would be nearly impossible to recruit people to serve on association boards of directors. Protections against legal exposure are extended to directors as follows:
1. D&O Insurance. Directors and Officers insurance protects against errors and omissions made while in office.
2. Statutory Indemnity. The Davis-Stirling Act protects volunteers from personal liability while on the board of directors provided they meet certain criteria. (Civ. Code § 5800; Corp. Code § 5047.5(b).) Directors and officers can also be indemnified by their association if they had no reasonable cause to believe their conduct was unlawful. (Corp. Code § 7237.) The Corporations Code extends further protections under the Business Judgement Rule.
3. Governing Documents. Typically, an association's CC&Rs and bylaws both contain exculpatory language as well as hold harmless and indemnity provisions protecting officers and directors from liability for negligent acts and omissions while in office.
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