There are many objections to board service that are often cited by unit owners who are reluctant to serve on their community association’s board of directors. While the time commitment is a prevalent concern, some believe that the post also brings with it an unreasonable level of liability and exposure to lawsuits by disgruntled unit owners.
To quell those concerns, such individuals should recognize that condo associations and HOAs typically carry Directors and Officers Liability Insurance (aka D&O insurance), which serves to defend and protect directors from lawsuits to which they may be exposed. Additionally, directors are also protected by indemnification provisions of the Florida laws governing not-for-profit corporations as well as the articles of incorporation of their association.
These protections shield directors from personal liability for monetary damages to the association or any others for any statement, vote, decision, or failure to act to the extent the director or officer was carrying out their duties. The exception to such protections under Florida law and association governing documents tend to arise with knowing violations of criminal law, transactions from which the director derived an improper personal benefit, willful misconduct, recklessness, or an act or omission which was committed in bad faith or with malicious purpose or in a manner exhibiting wanton and willful disregard of human rights, safety or property.
Under the relevant statutes and association documents, unless directors act in such an egregious manner, they should be indemnified by the association and any legal actions taken against them should be covered under the association’s D&O insurance. The coverage tends to include their legal defense and may extend to damages that may result from claims and/or negligence.
Essentially, so long as directors act in a reasonable manner and seek the guidance of qualified professionals regarding association matters, they will be able to rest assured that their indemnity and insurance protections will shield them from liability. The fear of exposure to frivolous lawsuits should not prevent any unit owners from answering the call to serve as a director or officer for their community’s association.