Directors and Officers Liability Insurance

Million dollar coverage is what is normally mentioned in the documentation required to have minimum.

How this all actually works is a bit complicated and mostly an "insurance claim". Having said that, it means the HOA has to pay the insurance deductible. Which in some cases like ours, the deductible is 20K.

Plus no one gets paid a million dollars. It doesn't work that way after all expenses. The real payout? It is usually maxed out at 80K. Anything above that awarded the members of the HOA would have to pay out of the budget.

Piercing the "corporate" shield to sue a board member individually is difficult.

We are a 107 homes community. We are talking about the ENTIRE HOA being covered not individual units. We had a pool and clubhouse. So our deductible is set pretty high to save money but also what we all had to cover in our insurance. Which was also board member liabilities and common areas. The HOA owned the property around everyone's homes. Owners just owned the house and the lot it sat on.

While I was on the board we carried $2 million in D&O coverage as well as an umbrella policy that would fill in any gaps. If I recall correctly, that was based on what our agent was seeing in claims and settlements and what our attorneys were seeing, so definitely check with your own experts on this.

You should double-check your CC&Rs to see what they say about insurance. Our Declaration lists specific targets for certain kinds of insurance (eg. fidelity insurance) tied to the amounts of money we have in our operating and reserve accounts in addition to the number of units in the community.

Insurance-company-provided attorneys are as capable as any other attorney.

But sometimes the insurance company will shop around for an attorney or law firm specialized in the matter in dispute and retain said attorney or law firm to represent the Board or a director. Albeit Augie's caveat is that such attorneys have a significant duty to the insurance company as well.From real life experience: For motion hearings and in general, no. At trial and if the director is on the witness list, and as needed, is subpoenaed, yes.

If for some reason the judge orders a director to be present, then this is a different matter.

Not ours thank you. Plus never was sued nor made claims. Our HOA carried a large deductible to help reduce expenses. Believe it was 10K but some are higher. Not all insurance are the same. We had a group policy covering many things.

Thanks for tryimg to insult my intelligence coming from you it means so little.

To add, where I lived we had $1M annual budget and $2M reserve account. We had $1M D&O with %K deductible because the association had 7 claims in three years. The insurance company imposed the deductible to curb the claims.

If, as you say, you had no claims on your D&O why would you have a $20K deductible when the premium is not that expensive.

True as long as the insurance policy has a "hammer clause" that lets the insurance company decide to settle regardless of how the HOA board feels about settling.

Nationwide, "hammer clauses" may or may not be present in a HOA's insurance policy.