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The three fiduciary duties board members of an HOA should uphold are the Duty of Care, the Duty of Loyalty, and the Duty to Act Within the Scope of Their Authority.
With the responsibilities also come risks and that is why your HOA's insurance should provide important liability protection for board members.
* General liability insurance is not enough. Liability insurance only protects the HOA itself from personal injury or property damage claims. Your HOA should have adequate Director's and Officer's (D&O) insurance, to protect board members in claims for the breach of a fiduciary duty.
Some associations make the mistake of not investing in this type of insurance, thinking that their close-knit community and board are like family. In this day and age, lawsuits have become commonplace.
It’s very risky to continue acting as though they will never face legal problems, and the consequences can be disastrous for all those involved.
Therefore, It is crucial for your association to be smart and do your research when deciding to invest in D&O coverage. Here is a list of tips to follow when selecting the policy:
Be Selective About Limits
It is important to carefully consider the pros and cons of policy limits. For instance, some plans have larger limits and cheaper deductibles but have a very small amount of coverage on the policy. Another policy may have a smaller limit and a larger deductible but provide very secure and far-reaching protection. Limits and deductibles vary largely based on company size, so it is crucial to consider your specific situation and purchase a policy that best serves your needs.
To get a free consultation regarding your insurance needs please contact Insurance MarketPlace Resources at 561-338-7452