Serving on a condo association board isn’t just about meetings and maintenance. Every financial, operational, and governance decision can influence how an entire neighborhood functions. Even when board members have the best intentions, those decisions can spark disagreements that turn into expensive disputes.
That’s why condo directors and officers insurance is an essential safety net. This specialized liability coverage helps protect board members, committee leaders, and the association itself from claims involving mismanagement, discrimination, breach of fiduciary duty, and other leadership-related exposures.
What Is Condo Directors and Officers Insurance?
Condo directors and officers (D&O) insurance provides coverage for claims alleging wrongful acts committed in a leadership capacity. These acts may include missteps in decision-making, violations of governing documents, or unfair enforcement of rules.
This protection differs from general liability insurance, which typically covers third-party bodily injury or property damage. In contrast, D&O insurance applies when individuals are accused of governance-related actions such as:
- Breach of fiduciary duty
- Non-employment discrimination
- Contract-related disputes (although these are often limited or excluded unless endorsed)
- Failure to follow association bylaws
For any condo association board of directors, D&O coverage is vital. Without it, board members could face personal financial risk even when acting in good faith.
Consider a real-world example: A condo unit owner sues the board, claiming they were unfairly targeted by a new architectural rule. A strong D&O policy would help pay for legal defense and potential settlement costs, without draining the association’s reserves or endangering board members’ personal assets.
Common Disputes Condo Boards Face
Condo boards may encounter several disputes that trigger legal action, such as:
- Alleged misuse or mismanagement of association funds
- Failure to maintain shared property or facilities
- Rule enforcement disputes
- Non-employment discrimination claims from unit owners
- Interpersonal conflicts between board members and homeowners
Any of these situations can lead to lawsuits, legal expenses, reputational damage, or settlement demands. Adding to the complexity, new legislation is reshaping how boards manage and enforce rules. For example, California’s Assembly Bill 130 (enacted in 2025) caps most HOA fines at $100 per violation, which may increase disputes over consistency and fairness in enforcement.
While some associations offer indemnification through their bylaws, this protection may not always apply. Indemnification can also be limited by the association’s financial condition or state laws. D&O insurance provides critical protection in these cases where indemnification is unavailable or contested.
Protecting Every Role on the Board
Disputes don’t just involve top officers. In many cases, trustees, committee members, volunteers, and even developers serving on the board can be pulled into legal proceedings.
At Kevin Davis Insurance Services (KDIS), we designed our D&O program to offer broad coverage. The policy protects:
- Board members, trustees, and officers
- Committee members and association volunteers
- Community managers and the management company
- The developer, when acting as a board member
Moreover, KDIS’s D&O policy includes:
- Broad definitions of “claim” and “insured”
- A duty to defend provision, which means immediate legal representation when a claim is filed
- Coverage for monetary and non-monetary demands
- Inclusion of punitive and exemplary damages where permitted by law
- Support for claims involving wrongful foreclosure, employment practices liability, and breach of fiduciary duty
Not all D&O policies offer these enhancements. Coverage for developer actions and punitive damages is especially uncommon and may be prohibited in some states due to public policy. (For example, some jurisdictions restrict insurance reimbursement for punitive damages entirely.) KDIS’s policy addresses these exposures based on real-world condo risks.
Empowering Agents To Strengthen Community Leadership
KDIS gives agents tools to help prevent disputes in the first place. Our support includes:
- Risk-management tools tailored for community associations
- Real-world claims data that informs coverage decisions
- Best practices for smarter board governance
You don’t need to become your client’s attorney or financial advisor to add value. By helping HOA clients select a policy that fits how their board actually operates, you can guide your clients toward more defensible leadership.
Partner with Kevin Davis Insurance Services to help your condo association board clients lead with clarity, confidence, and the right protections in place.
FAQ About Condo Association Directors and Officers Insurance
Why does an HOA need D&O insurance?
D&O insurance protects board members from personal liability tied to their governance decisions. Without it, even well-meaning leaders could face lawsuits and financial risk.
What exactly does D&O cover?
It covers wrongful act allegations, such as breach of fiduciary duty, non-employment discrimination, mismanagement, or contract-related disputes. It also typically includes legal defense and settlement costs.
Does D&O insurance cover legal defense costs?
Yes. Most comprehensive policies, like the one we offer at KDIS, include attorney fees, court costs, and related expenses for covered claims. Policies with duty to defend provisions provide immediate legal support when claims arise.
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 (855)-790-7393 to speak with one of our representatives.