Is Your Board Missing Two Important Coverages?
As of 2014, there are over 333,000 community associations in the U.S., comprised of about 66.7 million residents. Many of these Community Associations are managed by volunteer boards of directors that may not be aware of the additional loss exposures they face while serving on these boards.
Without the proper insurance coverage, the board members may face personal liability for their acts, errors or omissions while on the board. USLI’s Community Association Directors and Officers product is a comprehensive policy to address these loss exposures.
Two important USLI policy features include:
- Unlimited defense outside of the limits
- Lifetime Occurrence Reporting Provision (LORP)
Unlimited defense outside of the limits is an important coverage that any board of directors should have because these types of claims can be difficult to adjust and may take years to settle. Because of this, many carriers have a defense inside the limits condition, which starts to erode the limit provided once the claim is reported. When the carrier starts investigating and spending money on that claim, the limit provided is diminished by that amount and less money can be used to settle the claim as more money is spent.
USLI’s Community Association Directors and Officers product offers unlimited defense outside of the limits so the limit issued will always be full and intact to settle the claim regardless of how much money is spent to investigate and defend the claim.
The Lifetime Occurrence Reporting Provision (LORP) is another important product feature, which is specific to USLI. As coverage for directors and officers is typically on a claims made form, coverage must be in place at the time the claim is brought. If there is no coverage in place, the board becomes personally liable for the damages.
LORP is a hybrid coverage between the claims made and occurrence based forms and will provide coverage for a former board member when the current board has no directors and officers coverage in place. As long as the claim reported was the result of a wrongful act that occurred during USLI’s coverage period and the former board member was not involved in the decision to go without directors and officers coverage, the former member will have coverage through USLI’s policy.
Both of these coverage features are very important and, without them, the board could face additional burdens. USLI’s policy provides these coverages among many others that are crucial to protecting the assets of board members.
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As always, thank you for your support and business.
Written by Michael Plakis
September 15, 2016
Contact Tom Smith,
Community Association Package Product Leader | 888-523-5545 Ext. 2068