Many personal lines clients serve on boards — an HOA, a nonprofit, a church, a community organization. Board service creates personal liability exposure that their homeowners policy and personal umbrella won't touch.
Many of your personal lines clients serve on boards — a homeowners association, a local nonprofit, a school board, a church, a youth sports organization. What most of them don't realize is that board service creates personal liability exposure that a homeowners policy and personal umbrella won't cover.
What Board Members Are Actually Liable For
Serving on a board means making decisions on behalf of an organization. When those decisions go wrong — or when someone claims they went wrong — the people who made them can be named in a lawsuit personally.
The most common claims against nonprofit and HOA board members involve breach of fiduciary duty, mismanagement of funds, failure to follow bylaws, employment decisions, and contract disputes. None of these are covered by a standard homeowners policy or personal umbrella, which cover bodily injury and property damage — not the decisions a board member makes.
Volunteer protection statutes exist in most states, but they don't cover gross negligence, intentional misconduct, or decisions made outside the scope of board duties. They also don't cover defense costs in cases that ultimately fail — and defense costs alone on a contested claim can be significant.
How the Coverage Works
Nonprofit and HOA directors and officers (D&O) insurance covers the personal liability of board members for claims arising from their board service. Many organizations carry this at the entity level, which automatically protects individual members while they serve.
The problem is that many smaller nonprofits, newer HOAs, and community organizations either don't carry D&O at all, or carry limits too low to fund a defense on a serious claim. Board members rarely know whether the organization has it — or what the limits are.
The Question Worth Asking
For any personal lines client who mentions serving on a board — even a small, informal one — ask whether the organization carries D&O insurance and what the limits look like.
If they don't know, that's the conversation. They're making decisions that can be challenged legally, they can be named personally in a lawsuit for those decisions, and the time to find out whether they're covered is not after the claim arrives.