Short answer
Directors and officers liability insurance is intended to respond to claims alleging wrongful acts in the governance and management of the association — decisions, enforcement, elections and fiduciary matters — including defense costs, subject to the policy's terms and exclusions.
What this coverage is
D&O coverage responds to claims alleging a wrongful act by the association, its board members, officers, committee members and, on many forms, employees and the managing agent when specifically included.
Because association governance claims are frequently about non-monetary relief and procedure, defense cost coverage is often the most practically important element of the policy.
Why it matters to community associations
Volunteer board members make decisions affecting property rights, assessments and enforcement — areas that generate disputes.
Candidates for board service often ask whether they are protected before agreeing to serve.
D&O forms vary widely between carriers, far more than property or liability forms.
Common exposures
- Selective or improper rules enforcement allegations
- Architectural review and approval disputes
- Election and voting disputes
- Assessment, collection and foreclosure allegations
- Discrimination and fair housing allegations
- Breach of fiduciary duty and failure-to-maintain allegations
- Employment-related allegations where the association has employees
Questions boards should consider
- Does the policy cover non-monetary and injunctive relief defense?
- Are volunteers, committee members and the management company included as insureds?
- Is there coverage for prior acts, and what is the retroactive date?
- How do the defense provisions work, and who selects counsel?
- Are fair housing and discrimination allegations addressed or excluded?
- What conduct, contractual liability or bodily injury exclusions apply?
Common misconceptions
Misconception: “Volunteer immunity statutes make D&O unnecessary.”
Statutory protections vary and generally do not prevent a claim from being filed or eliminate the cost of defending it.
Misconception: “The general liability policy covers board decisions.”
General liability typically responds to bodily injury and property damage, not governance allegations.
Misconception: “All D&O policies are essentially the same.”
Definitions of insured, wrongful act and claim, along with exclusions and defense provisions, differ materially between carriers.
Risk-management considerations
- Follow and document the procedures in the governing documents
- Keep consistent, written records of enforcement and architectural decisions
- Use qualified legal counsel for collections, enforcement and fair housing questions
- Provide board orientation on fiduciary duties and meeting procedure
Frequently asked questions
Are individual board members personally protected?
D&O policies typically extend to individual directors and officers acting within the scope of their duties, subject to the policy's definitions and exclusions.
Does D&O cover an association that is sued for failing to maintain the property?
It depends on the form. Many policies exclude bodily injury and property damage, and some address failure-to-maintain allegations differently. The wording controls.
Sources
Coverage depends on the specific policy language, endorsements, facts of the loss and applicable law. This page is general information, not legal advice or a statement that coverage applies.
Written and reviewed by The Duncan Group Community Association Practice. Last reviewed September 2026.