Quick answer
When a condo association board is sued in a D&O claim, an agent who acts quickly and guides the board can help the claim move smoothly. In one case, the agency notified the carrier promptly, walked the board through preserving documents, and supported both the client and the adjuster, which helped keep defense costs down.
This article explains how The Oak Insurance Group assisted a condo association facing a difficult Directors & Officers (D&O) lawsuit involving a shadow board and allegations of mismanagement. It highlights the agency’s role in guiding the board through the claims process, preserving documentation, and supporting both the client and insurer to achieve a smooth claim resolution. The case demonstrates the agency’s value beyond policy issuance by providing strategic counsel during a complex insurance claim.
Key Takeaways:
- Promptly notifying the insurance carrier of a lawsuit helps ensure timely claim handling and support.
- Providing clear guidance on documentation and expectations can ease client anxiety during contentious claims.
- Supporting both the insured and the insurance adjuster can lead to efficient claim resolution and lower defense costs.
- Effective claim management can positively impact future insurance remarketing by maintaining favorable loss history.
- The Challenge
Our client was experiencing a volatile time in their condo association. Previous claims had led to homeowners speaking up continuously about the performance of the board. Undenounced to the current board, a shadow board had been formed of other homeowners in the community. This shadow board was formed to remove the current board from power. The property management company was unaware of any of this happening.
- How our Agency Intervened
Eventually the current board was notified of what was happening as was the property management company. A lawsuit was brought against the board and the condo association for poor management of the association as well as alleged mishandling of association funds. Our agency was put on notice by the board, and we put the carrier on notice of the lawsuit. The board was very distraught over what had happened to this point, that any group of homeowners would think forming a shadow board was the best way to deal with their grievances. Our agency walked them through step by step the documentation to preserve the information the carrier would want, and expectations for the process overall. We knew our clients were going to have questions as the shadow board was very difficult during the claims process. We also know, as an agency our value to clients is more than an insurance policy, it is providing counsel and guidance when it matters most.
- The Outcome
The claim was adjusted smoothly and efficiently by the carrier in a suboptimal situation. Our agency continued to support not only our client but also the adjuster too till the claim was closed. The shadow board, at the threat of a counter lawsuit the property manager as they were the fiduciary of the funds, dropped the lawsuit against the board and association. The efficient way the claim was handled kept defense costs down for our clients. This is important because it will help for future remarketing efforts approaching other carriers.
- Conclusion
Insurance is more than the contract and the paper it’s written on. Agents and agencies bring value to their clients when they define what that value is. At The Oak Insurance Group we define that as providing consultative, advice, guidance to our clients that go beyond issuing a policy for you.
Keep Reading
- Condo Insurance from The Oak Insurance Group
- Condo Insurance in Atlanta: What Your HOA Doesn’t Cover
- Homeowners & renters insurance facts (Insurance Information Institute)
Frequently asked questions
What is a D&O claim for a condo association?
A Directors and Officers (D&O) claim involves a lawsuit against a condo association's board. In one case, homeowners sued the board and association over alleged poor management and alleged mishandling of association funds, and the agency helped the board work through the claim.
What should a condo board do first when it is sued?
Promptly notify your agent and the insurance carrier of the lawsuit. In one case, the board put the agency on notice, and the agency put the carrier on notice, which helps ensure timely claim handling and support.
How can an insurance agent help during a D&O lawsuit?
The agent walked the board through, step by step, the documentation to preserve for the carrier and what to expect from the process. The agency also supported both the client and the adjuster until the claim closed, providing counsel and guidance beyond issuing a policy.
Why do defense costs matter after a D&O claim?
Efficient claim handling kept defense costs down for the association. This is important for future remarketing efforts with other carriers, because effective claim management can help maintain a favorable loss history. Results in any claim depend on its facts.
What is a shadow board in a condo association?
In one case, a shadow board was a group of other homeowners who formed in secret to remove the current board from power. The board and the property management company were initially unaware of it, and a lawsuit against the board and association followed.
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