A board denies an architectural request. A homeowner challenges an election. Legal counsel gets involved — and only then does the homeowners association (HOA) board learn the claim does not fall under its directors and officers (D&O) policy.
Scenarios like this are common in community associations, largely because board members often misunderstand the scope of HOA D&O insurance. Volunteer leadership, overlapping policies, and informal governance practices can create false assumptions about what coverage actually applies.
Why Board Members Often Misunderstand HOA D&O Insurance
Most board members do not come into their roles with insurance or legal backgrounds. As a result, misunderstandings tend to stem from a few recurring issues:
- Volunteer board members assume good intentions eliminate liability
- Boards expect D&O insurance to function like general liability coverage
- Overlapping policies create the belief that “something” will respond, even if D&O does not
Without guidance, boards may not realize that HOA D&O insurance focuses on governance-related allegations — not every dispute, action, or mistake that arises during association operations.
Common Exclusions In D&O Insurance
While policy language varies by carrier and endorsement, several exclusion categories frequently surprise boards. Agents should prepare clients for situations where D&O coverage may not apply, including:
- Bodily injury or property damage claims, which typically fall under general liability
- Dishonest, fraudulent, or intentionally wrongful acts
- Disputes arising from actions taken outside the board’s authority
- Failure to follow governing documents or required procedures
- Matters better addressed under other policies, such as crime insurance
Governance missteps often intersect with these exclusions. For example, when boards ignore established election procedures or enforce rules inconsistently, allegations may arise that challenge whether actions were taken within authorized duties.
The Community Associations Institute highlights three governance pitfalls that frequently lead to disputes: failure to follow governing documents, inconsistent enforcement of rules, and poor communication with homeowners. Each of these increases the likelihood that a claim falls outside HOA D&O insurance coverage when challenged.
How Coverage Gaps Impact the HOA Board Of Directors
When exclusions apply, consequences can be costly — financially, emotionally, and professionally. Board members may face:
- Defense costs not reimbursed by insurance
- Personal stress tied to governance disputes
- Difficulty recruiting future volunteers due to perceived liability exposure
By explaining coverage limitations upfront, agents help boards improve documentation, tighten decision-making processes, and align insurance structure with actual governance practices.
Using HOA D&O Insurance as Part of a Broader Risk Strategy
HOA D&O insurance remains a critical component of community association risk management — but it is not a catch-all solution. Agents should position D&O discussions as part of an ongoing governance strategy that includes education, policy review, and expectation management.
Reach out to Kevin Davis Insurance Services to help community association clients better understand what HOA D&O insurance does and does not cover. We can review governance-related exposures and align coverage structure before disputes become uncovered claims.
Did you miss our January webinar?
Start 2026 with a stronger foundation by watching Back to Basics: D&O Insurance 101 for Community Associations. This on-demand webinar walks through the essentials every board member should understand, including:
- What Directors & Officers (D&O) Liability Insurance covers
• Common exclusions and misconceptions
• Why D&O knowledge matters for every board member
January is the perfect time to refocus and return to the fundamentals. If you’re looking to build confidence in managing your community association, this refresher is a great place to start.
👉 Watch the full webinar here.
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.