The Effective Board Continued...

work situations, you will practice these techniques in role-play exercises. You will learn how to implement a six-step process for managing your encounters with difficult people more productively.

This is a four-hour course, which can be customized to meet the needs of your group. Please contact Mary Delmege at 760-504-7977 if you have any questions or you may register at http:// marydelmege. com / training.

Workshop Details September 12, 2012, 9:00 am to 1:00 pm

Melrose Law Center 380 South Melrose Drive Vista, CA 92081

Cost: $ 95

Ms. Delmege has mediated several hundred cases for businesses, community associations and neighborhood conflicts. She has a very high rate of success in helping disputing parties develop practical solutions to difficult problems. She also teaches mediation skills to adults and teens. Ms. Delmege is a member of the San Diego County Superior Court’ s Civil Mediation Panel, the Southern California Mediation Association and the Community Association Institute.

In addition to her extensive mediation background, Ms. Delmege has served in a variety of management and advisory positions for the U. S. Commerce Department, including Southwestern Regional Manager and Senior Advisor to the Trade Promotion Coordinating Committee. She began her Commercial Service career as a Foreign Service Officer in Mexico City, where she directed market research and outreach activities.

Prior to joining the Commerce Department, Ms. Delmege served as Marketing Director for private sector firms specializing in industrial and automotive products throughout the United States and Mexico.

Ms. Delmege’ s education and training includes:

• BA in Economics from Claremont Men’ s College

• MBA from the Anderson School of Business at UCLA

• Senior Executive Fellowship from the Kennedy School of Government at Harvard

• Mediation Certificate, Gregg Relyea Esq.

• Mediation Certificate from North County Lifeline in Vista, California

• Mediation Credential from the National Conflict Resolution Center HOA

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Directors and Officers Liability Insurance

By Michael Berg

So many times the question is asked,“ Is this covered by our Directors and Officers Liability policy?”

Most people can easily wrap their head around the concept of property insurance: if property is damaged by an event( peril), and that peril is covered in the policy, the insurance company will pay the cost to repair the property.

But liability insurance, specifically Directors and Officers liability, is a little more cryptic. The full title of the coverage is Directors and Officers Errors and Omissions. The protection here is not necessarily for a particular event, but for an allegation others make toward errors in the decisionmaking process of the board.

Directors and Officers( D & O) insurance is a professional liability policy. Think malpractice insurance for an attorney. The coverage is used to protect the association when someone feels there was an error or omission by the board. For example, a common allegation is breach of fiduciary duty, wherein a board of directors allegedly failed to act in the best interest of the membership.

If a member of an association feels the board made a decision that adversely affected him / her, a claim against the association D & O policy is likely. Because almost every policy requires the carrier to defend the suit at the outset( a duty to defend), the cost of attorney’ s fees are picked up by the carrier. The duty to defend language in most D & O policies actually requires the carrier to take control of the claim defense process, which is why the carrier will assign counsel in the vast majority of claims. Most carriers will issue a reservation of rights letter at the outset of the claim process. This means that the carrier will investigate and / or defend the insured, while still reserving the right to deny coverage in the future if the claim is ultimately not a covered allegation.

Like any insurance policy, there are specifically excluded allegations. Because of the nature of the policy, the exclusions are relatively minimal. Claims for bodily injury or property damage are excluded, as are claims for known wrongful acts. Most policies do not exclude, or will endorse( add) coverage for, employment practices( wrongful termination), failure to maintain adequate insurance, discrimination and defense costs for breach of contract. Review your policy, and consult your insurance professional and legal counsel for information about your specific coverage.

Once the defense is established, the investigation into the allegation will reveal 1) if the allegation is specifically excluded and 2) if there was indeed an error or omission. If excluded, the carrier will issue the denial, and the insured must provide for its own defense. If not excluded, then the investigation will continue into the actual alleged error or omission.

The discussion of the actual activity on the claim from this point to the payment of a judgment or a settlement far exceeds this article. Suffice it to say, the best protection for the board is to operate and make decisions within the Business Judgment Rule:

1. Act in good faith

2. Act with the care another person in a similar position would exercise( i. e. be prudent)

3. Act in the best interest of the association

Keeping this simple rule in mind, and understanding the limitations of your specific policy, will help ensure that defense of allegations will be provided by the D & O insurance carrier. HOA

Michael Berg, CIRMS, CMCA, MBA – Director of Operations for Berg Insurance Agency – Michael has been a licensed insurance agent and member of the Berg Insurance Agency for over ten years. After receiving his degree in Earth Sciences from the University of California, Santa Cruz, Michael worked for a local geotechnical firm as a Staff Geologist before joining the agency. Michael has since graduated with honors from Chapman University where he received his Masters in Business Administration. He is very active in Community Associations Institute( CAI) and California Association of Community Managers( CACM), currently co-teaching the insurance section of CAI Orange County’ s Community Leadership Training Program, and serving on the board. He prides himself on providing service above and beyond what is typically expected, writing articles for association newsletters and attending membership meetings to answer questions and educate the memberships.

Berg Insurance Agency 23651 Birtcher Drive Lake Forest, CA 92630( 800) 989-7990 x216 Michael @ BergInsurance. com www. BergInsurance. com

The HOA Board Quarterly Summer 2012 Issue #3 | Page 4