Best Practices for Building Management Associations

1. How to Protect Your
Board of Directors
Best Practices for
Building Management Associations

2. Did You Know?
Good intentions won’t protect building associations and their boards of directors
from legal claims.
Directors and officers (D&O) liability insurance is essential for protecting the
association and its board members from lawsuits that result from actions or
decisions made while serving.
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3. What Does D&O Insurance Cover?
Your organization needs to ensure your board is able make decisions without fear of
personal financial consequences. Directors and Officers Liability Insurance commonly
covers:
• Defense costs and financial losses for claims made against current, previous and
future directors and officers while serving on your board
• Employment practice allegations or other HR issues
• Reporting errors
• Failure to comply with regulations
• Personal injury (not to be mistaken for bodily injury): libel, slander or defamation
allegations
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4. What is NOT Covered Under D&O Insurance?
Some of the most common exclusions are:
• Fraud or illegal activity
• Property damage or bodily injury
• Existing lawsuits already started before policy term
• Breach of contract
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5. How to Avoid Claims in
the First Place
The right insurance coverage is
only part of the solution.
Building management
associations are encouraged to
follow these best practices to
protect the association and its
board of directors…
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6. Best Practices for Optimal Protection
In addition to Directors and Officers Liability Insurance, following these can often be the best
protection:
1. The Right Board Members or Committed Board Members
2. Bylaws Acceptance
3. Up-to-Date Governing Documents
4. Professional Counsel
5. Resident Communications
6. Accurate Minutes
7. Complaint & Response Log
8. Professional Meetings
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7. 1. The Right Board Members
• Elect board members who are serious and understand what their
responsibilities will entail.
• Provide training for all board members
• Make sure members have a good understanding of the association’s
bylaws and other governing documents.
• Many claims result from boards’ failure to uphold the building bylaws or
follow other rules.
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8. 2. Bylaws
Acceptance
Require new residents to
read and sign-off on the
bylaws and other
regulations when they move
in. This step can help avoid
infractions and
misunderstandings later.
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9. 3. Review Governing Documents
• Review bylaws and other
governing documents
regularly (at least once
each year) to ensure that
they remain up to date.
• Changes in local law, for
instance, may require
amendments to keep the
property in compliance.
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10. 4. Retain Counsel
Retain association counsel and
hire professionals for decisions
that fall outside the board’s
comfort zone.
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11. 5. Resident Communications
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Provide a system that allows
residents to address problems or
grievances. Timely communication
can help keep small issues from
escalating into big ones.

12. 6. Accurate Minutes
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Keep good records and accurate
minutes of board meetings. Failure
to document amendments to
bylaws and other governing
documents can cause problems in
the event of legal action.

13. 7. Complaint & Response Log
Maintain a complaint log that includes details on association/board
response to complaints. Such records can establish precedent and
reduce the likelihood of inconsistent actions.
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14. 8. Keep Meetings Professional
Follow a basic guide like Robert’s Rules of Order for running meetings
as a way to remove emotions and personalities from the equation.
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15. Recap
• Protect your directors and officers with D&O liability insurance
• Have the right board members working with you
• Have residents accept bylaws and acknowledge with a signature
• Keep governing documents updated regularly
• Retain professional legal counsel for issues the board can or shouldn’t handle
• Allow for easy communication with residents
• Keep accurate minutes as records of discussions and decisions in case of a lawsuit
• Ensure consistent decisions and communication with a complaint & response log
• Keep meetings professional with Robert’s Rules of Order
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877-576-5200
Be sure to implement these best practices to reduce liability risks.
If you have additional questions about how to protect your board or need D&O
liability insurance information, call City Building Owners Insurance Program.
citybuildingowners.com