D&O vs. E&O for HOAs: Why Associations Need Both

As an insurance provider, you know the risks that your clients face when they don’t have adequate coverage. Those who live in a planned unit development or common interest community more than likely live in an HOA operated by a board of directors. Since these boards have a wide range of responsibilities, including setting an annual budget, collecting dues and fees, maintaining common areas and enforcing regulations, there could be moments where disagreements arise.

In the event of a legal matter, it’s important that your clients have the right coverage, and not just any coverage or the first option they’re given. So, how do they know which is the most effective one to have? In some cases having more than one type of insurance package is the way to go. The most common types for HOAs are Directors and Officers (D&O) and Errors and Omissions (E&O) insurance. Let’s take a look at the benefits of each and why having both can be beneficial.

Errors & Omissions

This kind of insurance is specifically designed to protect an HOA against allegations related to failing to provide adequate professional services. This insurance can also safeguard against financial damage or other negative consequences of services provided by an HOA. E&O provides protection for any representative of a business, or, in this case, an HOA. Essentially, it’s a full-circle package that covers all board members, not just the higher-ups.

Directors & Officers

D&O is a kind of liability insurance that zeroes in on who it protects, in this case directors and officers of an HOA. D&O protects against claims made against an HOA’s members while they’re serving and is geared toward the individual. Some D&O coverages cover legal fees and additional costs related to a legal matter.

Having Both

While individually it’s easy to see the benefits of having either insurance coverage depending on you client’s goals, it’s also beneficial to have them invest in both. Having a dual approach to insurance coverage will provide the right amount of protection across the board, literally. An HOA’s executive members can operate soundly knowing they have the right coverage to back them up, and the additional members will also be able to work without the stress of not being protected.

Having both insurance options may be a steep price for some clients, but it’s plain to see that having a layered approach to safely operating will make a world of difference, especially in the event of legal matters.

About Kevin Davis Insurance Services

For over 35 years, Kevin Davis Insurance Services has built an impressive reputation as a strong wholesale broker offering insurance products for the community association industry. Our president Kevin Davis and his team take pride in offering committed services to the community association market and providing them with unparalleled access to high-quality coverage, competitive premiums, superior markets, and detailed customer service. To learn more about the coverage we offer, contact us toll-free at (877) 807-8708 to speak with one of our representatives.