Serving on a condo board is a tremendous responsibility. In addition to taking on a considerable amount of work, it also involves taking on significant risk exposure. Condo board members can be personally liable for legal claims arising from their management of the association’s business. It is essential that condo association board members have a directors and officers insurance policy that will protect them in the event that they are subject to a legal claim.
Breach of Fiduciary Duty
A person who manages funds on behalf of another individual or organization owes a fiduciary duty of care.. A condo association that fails to properly manage the membership’s funds or fails to disclose information to the membership could face a claim for breach of fiduciary duty.
The physical upkeep of a condominium building is one of a condo association’s most pressing duties. Failure to maintain the building could result in extremely costly capital needs projects. Condo board insurance can offer a vital safeguard for board members if the membership alleges that negligence has resulted in physical damage to the building or financial damages to the individual unit owners.
Ultimately, anyone serving on a condo board needs to be aware of their liability risks. They must also ascertain that the association has adequate insurance coverage that meets the full scope of their liability exposure.