Errors and Ommissions Policy

Suing your HOA is suing yourself and your neighbors. So it had better be worth the cause. This case ALL members will be paying their portion of the deductible bill. It should not be just one member. They should have countersued if they wanted the money. Now they just need to put the bill in the budget. If your HOA can't afford this then a special assessment will need to be done to cover the cost. Which is divided EVENLY amongst ALL members to pay.

Our association will be paying for it, not the board members. They paid an
attorney $5,000 to keep people off the board-using the communities money.

Just an fyi, once you make a claim for insurance, especially, Error and Omissions Policy, be prepared for the insurance company to drop you. You will be added to a national database for all other insurance companies to look you up when quoting insurance rates. They will either not quote you, or quote you a very high fee.

Error and Omissions Policy is something you DO NOT want to make a claim against unless you absolutely must. Good luck with dues in the next year and into the future.

Thanks Steve,
Well that is the type of members that are on our board! One of the board
members suggested that since they volunteer their time they should not have
to pay their assessments. I couldn't believe it. Isn't that why it is
called a volunteer board of directors? I think he shouldn't be on the board
if he doesn't want to volunteer his time.

Cheryl,

Can the board go after the resident for the $1000? Well, they can try, but it doesn't mean they'll be successful.

1. Is this resident also a homeowner (association member)? Or, it this resident a renter?

2. If they send a bill to the resident, it's not likely the resident will simply pay it.

3. There is likely nothing in your CCRs or bylaws that authorizes the association to levy an assessment against a single resident in this specific case. Thus, there would likely be no grounds to file a lien.

4. That leaves only a lawsuit to force the resident to pay the $1000. As has been pointed out, that will cost more than the $1000 they are seeking. No insurance will cover a lawsuit initiated by the association, so all the up front costs will be borne by the association (which means everyone who is a member). If the association is successful, which is not likely since they dropped the ball when they had the chance, they could seek reimbursement of the expenses for bringing the lawsuit, which may or may not be granted. Too iffy for me, and not worth the cost for all the residents to be out that money for the time it will take to find out.

5. As for board members being exempt from paying dues, some states (Connecticut is one) have laws prohibiting this. Also, it is likely that your CCRs and bylaws do not provide for compensation for directors, and being exempt from paying dues is a form of compensation. Furthermore, if board members (directors) were exempt from dues, the IRS considers that as "barter income" and is subject to taxation, including both income and self-employment tax. By the way, I believe the directors of most corporations serve without compensation.

What is an Errors & Ommissions policy ? Our HOA is being sued when it's said and done does that mean the insurance will be canceled ?

BB5

Professional liability insurance (PLI), also called professional indemnity insurance (PII) but more commonly known as errors & omissions (E&O) in the US, is a form of liability insurance that helps protect professional advice and service providing individuals and companies from bearing the full cost of defending agains a suit.

Typically insurance an HOA has to protect their BOD/Directors.