One of the most important pieces of insurance coverage a co-op or condo building carries is its
directors and officers (D & O) policy. This coverage protects the personal assets of board members from exposure in the event a lawsuit is filed against the board. In many such suits, the building's management firm, its principals and the individual agent responsible for the building are also named.
Until now, in such a situation, the board would activate its D & O coverage and its insurance carrier would provide legal defense for the board members. But the management company would have to engage its own separate defense. Few boards realize, however, that they usually wind up paying for the management company's legal fees because of a boilerplate hold harmless clause in most management contracts.
A Recent Change
Things changed late last year, however, when Chubb Group Insurance introduced a rider now available that will enable a board to add its management company and agent as additional insured on its D & O liability policy. The announcement, made by Kevin Davis, vice president of Ian H. Graham, a California-based broker for Chubb, at a December 1995 seminar sponsored by the recently-established Association of Cooperative and Condominium Managers (ACCM), set a new standard for residential property insurance coverage.