Directors & Officers Insurance for Condo Associations: Essential Endorsements Every Board Needs
D&O insurance protects condo board members from personal liability — but only if the policy has the right endorsements. Here are the critical additions every Florida condo association should demand.
Why Every Condo Board Needs D&O Insurance
If you serve on a condominium association board in Florida, you're making decisions that affect millions of dollars in property, hundreds of residents' daily lives, and a web of legal obligations that grows more complex every year. Directors & Officers (D&O) insurance exists to protect you personally when someone disagrees with those decisions — and in Florida's condo environment, disagreements turn into lawsuits more often than most board members expect.
A basic D&O policy is a start, but it's not enough. The endorsements attached to your policy determine whether you're actually protected when a claim hits. Let's break down what D&O insurance covers, the endorsements that matter most, and the gaps that leave Florida condo boards exposed.
What D&O Insurance Actually Covers
D&O liability insurance protects the individual directors and officers of your condo association against claims alleging they made errors, omissions, or wrongful acts in their capacity as board members. This includes:
- Breach of fiduciary duty — A unit owner claims the board mismanaged association funds
- Failure to maintain — Allegations that the board neglected building maintenance
- Discrimination claims — A resident alleges the board enforced rules selectively
- Improper assessment levies — Disputes over special assessments or budget decisions
- Failure to enforce CC&Rs — Claims that the board didn't enforce community rules consistently
The policy typically covers legal defense costs, settlements, and judgments — but only for claims that fall within the policy's terms. That's where endorsements become critical.
The 8 Essential D&O Endorsements for Florida Condo Associations
1. Employment Practices Liability (EPLI)
If your association employs anyone — a property manager, maintenance staff, front desk personnel — you need EPLI coverage. This endorsement covers claims of wrongful termination, discrimination, harassment, and retaliation brought by employees against the association or its board.
Why it matters: Employment lawsuits are among the most expensive claims associations face. Without EPLI, your D&O policy won't respond to these claims at all.
2. Third-Party Discrimination Coverage
Standard D&O policies typically cover claims brought by the association's own employees. But what about claims from residents, vendors, or prospective buyers who allege discrimination? Third-party coverage extends protection to these claims.
Why it matters: Fair Housing Act violations are a growing area of litigation for condo associations. A resident who claims the board discriminated based on race, disability, familial status, or national origin can bring a federal lawsuit. Without this endorsement, the board is on its own.
3. Prior Acts (Retroactive Date) Coverage
D&O policies are "claims-made," meaning they cover claims made during the policy period, regardless of when the alleged wrongful act occurred — but only if the act happened after the policy's retroactive date. The best policies set the retroactive date to "full prior acts," covering decisions made before the current policy was purchased.
Why it matters: Board decisions from years ago can trigger lawsuits today. If your policy has a limited retroactive date, claims based on older decisions won't be covered. Always negotiate for full prior acts coverage, especially when switching carriers.
4. Non-Monetary / Injunctive Relief Defense
Many condo disputes don't seek money — they seek court orders. A unit owner might sue to force the board to hold an election, reverse a rule change, or stop a construction project. Policies that only cover "monetary damages" won't respond to these claims.
Why it matters: In Florida, governance disputes are extremely common. A policy that only covers monetary claims can leave your board without defense coverage in the exact situations where you need it most. Make sure your policy covers defense costs for non-monetary and injunctive relief claims.
5. Expanded Insured Definition
A standard D&O policy covers the named directors and officers. But who else acts on behalf of the association? Committee members, volunteers, the property management company, and even past board members may need coverage.
Why it matters: If a committee member makes a decision that leads to a lawsuit, and they're not covered under your D&O policy, the association could be left holding the bag. Look for policies that define "insured" broadly to include:
- Current and former directors and officers
- Committee members and volunteers
- The property management company (as an additional insured)
- The association entity itself
6. Duty to Defend (Not Just Reimburse)
This is one of the most consequential distinctions in D&O insurance. Some policies provide a duty to defend, meaning the carrier assigns and pays for legal counsel from day one. Others only provide duty to reimburse, meaning the board must hire and pay for their own attorney upfront, then seek reimbursement later.
Why it matters: Legal defense in a condo dispute can cost $50,000 to $200,000 or more. A duty-to-reimburse policy forces the board to come up with that money first — which many associations simply can't do. A duty-to-defend policy removes that financial burden and ensures the board gets competent legal representation immediately.
7. Regulatory Defense Coverage
Florida's Division of Condominiums actively investigates complaints against condo associations. If the state opens an investigation into your board's actions, you'll need legal representation — and standard D&O policies often exclude regulatory proceedings.
Why it matters: Post-Surfside, regulatory scrutiny of condo associations has intensified significantly. SB 4-D milestone inspections, reserve study requirements, and structural integrity reporting have created new compliance obligations. A regulatory defense endorsement covers the legal costs of responding to government investigations and proceedings.
8. Crime / Fidelity Bond Coverage
While technically a separate coverage, a fidelity bond is essential alongside D&O insurance. Florida Statute §718.111(11)(d) requires condo associations to maintain fidelity bonding for all persons who control or disburse association funds. The bond protects the association against theft or embezzlement by board members, employees, or management company staff.
Why it matters: Embezzlement by property managers or board treasurers is more common than most people realize. Florida law requires fidelity bonding, and your D&O policy won't cover criminal acts. Make sure your bond amount covers at least the maximum amount of funds in the association's control at any point during the year.
Common D&O Exclusions That Catch Boards Off Guard
Even with the right endorsements, every D&O policy has exclusions. Here are the ones Florida condo boards should understand:
| Exclusion | What It Means | How to Mitigate |
|---|---|---|
| Bodily Injury / Property Damage | D&O won't cover slip-and-fall or building damage claims | Ensure your General Liability policy is adequate |
| Prior / Known Claims | Claims you knew about before buying the policy aren't covered | Disclose everything on the application honestly |
| Contractual Liability | Claims arising from breach of contract may be excluded | Review vendor contracts and ensure GL covers contractual exposure |
| Criminal / Fraudulent Acts | Intentional wrongdoing is never covered | D&O only protects good-faith decisions |
| Developer Transition | Claims related to developer-era decisions may be excluded | Critical for newer associations still in developer control |
| Construction Defect | Building defect claims typically excluded from D&O | Pursue these under the developer's or contractor's policies |
How Much D&O Coverage Does Your Association Need?
The right amount depends on your association's size, budget, and risk profile. Here are general guidelines:
| Association Size | Recommended D&O Limit |
|---|---|
| Small (under 50 units) | $1,000,000 |
| Medium (50-200 units) | $2,000,000 - $3,000,000 |
| Large (200+ units) | $3,000,000 - $5,000,000 |
| High-rise / Luxury | $5,000,000+ |
These are starting points. Associations with active litigation, large reserves, or complex governance structures should consider higher limits.
The Post-Surfside Reality: Why D&O Matters More Than Ever
The Champlain Towers South collapse in 2021 fundamentally changed the landscape for Florida condo associations. The resulting legislation — SB 4-D and subsequent amendments — created new obligations that directly increase board members' liability exposure:
- Milestone inspections are now mandatory for buildings 3+ stories and 25+ years old (or 30+ years if more than 3 miles from the coast)
- Structural Integrity Reserve Studies (SIRS) are required, and associations can no longer waive reserves for structural components
- Reserve funding must be adequate — boards that underfund reserves face personal liability risk
These requirements mean board members are making higher-stakes decisions than ever before. A board that delays a milestone inspection, underfunds reserves, or ignores a structural engineer's recommendations faces significant personal liability. Proper D&O coverage with the right endorsements is no longer optional — it's essential.
The Bottom Line
D&O insurance is only as good as its endorsements. A bare-bones policy might check a box, but it won't protect your board when a real claim hits. Florida condo associations should demand:
- Full prior acts coverage
- Duty to defend (not reimburse)
- EPLI and third-party discrimination coverage
- Non-monetary / injunctive relief defense
- Expanded insured definitions
- Regulatory defense coverage
- Adequate fidelity bonding
Don't wait for a lawsuit to find out your policy has gaps. Have your D&O coverage reviewed by an independent insurance advisor who understands Florida condo law.
Need a D&O policy review for your condo association? Call us at (904) 900-5063 or request a free coverage review. We'll identify gaps in your current coverage and help you get the endorsements your board needs.
Ricardo Alonso
Founder, Atesa Risk Advisors
Ricardo is a RamseyTrusted insurance advisor with a Harvard ALM in Finance. He founded Atesa Risk Advisors to bring honest, independent insurance guidance to Florida businesses and individuals.