Serving on a community association board is a volunteer position with real legal exposure. Directors and officers insurance protects individual board members, committee members, and the association itself against claims alleging wrongful acts in the governance of the association — breach of fiduciary duty, failure to maintain the property, improper use of funds, discrimination in rule enforcement, failure to enforce governing documents, and more.
If your association doesn’t carry D&O coverage, every volunteer board member is personally exposed to litigation costs and potential judgments. Even frivolous lawsuits cost money to defend.
What D&O typically covers
Defense costs (attorney fees, court costs) and settlements or judgments arising from claims of wrongful acts by directors, officers, committee members, and employees acting in their governance capacity. Most policies cover the individuals personally AND the association entity. Some policies also include Employment Practices Liability (EPL) covering claims by employees alleging wrongful termination, harassment, or discrimination.
What D&O does NOT cover
Intentional fraud or criminal acts. Personal profit or advantage gained illegally. Bodily injury or property damage (that’s your GL policy). Claims arising from activities outside the scope of association governance. Most policies also exclude claims related to professional services — if a board member who happens to be an architect provides professional design advice to the association, their professional liability is not covered under D&O.
Florida-specific considerations
Florida provides limited statutory protection for volunteer board members under Section 617.0834 (for not-for-profit corporations) and the Volunteer Protection Act. However, these protections have significant exceptions — they generally don’t apply if the volunteer acted with willful or wanton disregard, gross negligence, or outside the scope of their duties. They also don’t prevent someone from filing a lawsuit, which means defense costs still accumulate even if the board member ultimately prevails. D&O insurance fills the practical gap that statutory protections leave open.
Fidelity Bond / Crime coverage
Fidelity bond coverage is often bundled with D&O or written as a companion policy. Florida statute (Section 718.111(11)(d) for condominiums) requires associations to maintain fidelity bonding covering all persons who control or disburse association funds. The coverage amount should equal the maximum funds that will be in the custody of the association or its management agent at any one time — typically matching your operating account, reserve account, and any other association funds combined.
This is a coverage that often goes years without being updated. An association that had $500K in reserves when the bond was written may now have $2M. If the bond limit is still $500K, the association is exposed for $1.5M in potential theft or dishonesty loss.
What boards should be asking
Does our D&O policy include EPL coverage? What’s our fidelity bond limit, and does it match our current fund balances? Are committee members covered, or only named directors? Is there a prior acts date that limits coverage for claims arising from events before a certain date? What’s the retention (deductible) and who pays it — the individual or the association?
Common Elements will specialize in D&O and fidelity bond placements for community associations when we launch. Join our waitlist to be notified.