Directors and Officers Liability coverage for HOA’s, Co-ops, Non-Profits, and other Volunteer Positions

Directors and Officers Liability coverage is typically an optional coverage on business owner policies, but it can be one that is particularly critical depending on the liability exposure of your company or organization.

Typically, the option to add Directors and Officers Liability to your policy is important in situations where an organization or company has directors, officers, board members, etc., who are not employees. This can range from things like homeowners associations, condos, and co-ops, to all kinds of non-profit boards and committees, to school boards or booster clubs. In each case, people with an interest in the organization are asked to take on a role where they are directly responsible for making decisions that steer the organization, but because they are not employed and compensated by the organization, they are not covered by the organization’s liability coverage.

Emotions can run high when a small group of people is tasked with making decisions that impact a larger group because not everyone is always going to agree on the best course of action, nor is there always a win/win decision available in every situation which means there are going to be people who lose something tangible as a result of the decisions of this small group. Unfortunately, this is a best case scenario because there are also quite a few lawsuits filed when that small group of people makes a decision in good faith that does not have the expected or desired results at all, and someone feels harmed by those unexpected or unintended results. Last, there are occasionally decisions made in less than good faith or without the best information that tend to be called negligence.

Whatever the cause, it’s important that the organization has coverage in place as part of their business owner policy to protect their non-employed Officers and Directors from the cost of lawsuits and judgments. Just like other liability related coverages, Directors and Officers Liability provides for the defense of, and judgments against, any directors or officers up to the liability limits listed in the policy for claims made against them as a result of actions taken or decisions made while serving in an elected or designated role with an organization. It’s very straightforward without any significant exclusions or clauses.

Cost is typically not an issue in that coverage of around $2million can be purchased for less than $50 a year. Some umbrella policies will augment this to provide additional coverage through the Umbrella Liability Policy, typically at no additional charge.

America is unique in our ability to inspire our citizens to donate their time freely to the causes and organizations that are important to us, let’s make sure that no one lives to regret that generosity by making sure that their liability coverage is in place and adequate to whatever may come their way.


This post was written by Aaron Nicklay, Agent with Farmer’s Insurance. For more information on Directors and Officers Liability coverage and how Aaron can help protect your business, email him at or call (952) 229-5155.

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