When does a threat, complaint or situation become serious enough to warrant a D&O claim? This is by far one of the toughest things to consider as a Board Member or Community Manager. As your broker, we take a very conservative approach. We’ve seen numerous examples where Associations try to resolve things on their own, only reporting the claim to the D&O carrier when things get out of control. We’ve seen claims denied because the insured had knowledge that they might be headed for litigation, but did not give the insurer notice early enough in the process. We’ve also seen certain expenses denied when an Association waits to turn in a claim when they had already accrued expenses. We always advise our insureds when in doubt let the carrier know what’s going on and ask them to document it as an Occurrence Only and not an actual claim. Most carriers will do minimal work (assign a claim number and reach out to insured for a statement), thus keeping the expenses low for the loss history, but still documenting the occurrence so you the insured are doing your due diligence.
Below is a link to a great article put out by Ian H. Graham Insurance who wholesales the very popular CNA D&O product.