Directors & Offi cers (D&O) claims focus on board and/or management decisions, often the source of debate within a community. These may involve allegations of wrongful decisions, failure to enforce governing documents or established policies (such as architectural guidelines), discrimination, or mismanagement. The trigger isn’t limited to lawsuits—any written demand, allegation, or threat of legal action qualifi es.
Because D&O is written on a claims-made basis, it’s critical to notify the carrier as soon as a demand or threat is received.
This timing becomes especially important when an association is changing insurance carriers. Potential D&O claims should be reported to the current carrier before the policy expires, even if the matter has not yet developed into a formal claim. At the same time, it is prudent to disclose the same potential claims to the new carrier during the underwriting process. Doing both helps preserve coverage under the expiring policy while avoiding surprises or coverage disputes under the new one.
Waiting to see if an issue escalates is risky. If an allegation is not reported during the policy period in which it is fi rst made, coverage may be declined. Even minor-sounding complaints can evolve into formal claims, and timely reporting helps ensure the association preserves its rights under the policy.
What Really Happens When You Give Notice (Not Just a Friendly Heads-Up)
Once a carrier receives notice, whether labeled “notice only” or not, they must open a claim fi le, assign a claim number, and track the matter. There’s no such thing as a half-claim. Even if no money is paid out, the process is triggered the moment notice is received.
“Notice Only” vs. Active Claims Carriers treat “notice only” claims somewhat differently than fully active claims. In a notice-only scenario, the adjuster may open a fi le, record the facts, and then hold the fi le open without major investigation or reserves. It’s essentially bookmarking the issue in case it escalates. An active claim, by contrast, involves full investigation, document requests, site inspections, and reserves. A notice-only claim becomes active if new information arises, such as a notice of lawsuit, a formal demand letter, a formal allegation of negligence, or in the case of a general liability claim, confi rmation of serious damage or injury.
Why the Confusion Persists The habit of “I told my agent, so I’m covered” is widespread. Even experienced managers have been caught off guard when a claim was denied because notice was never formally submitted to the insurance company. The insurance agent does not have the authority to approve or deny claims, and carriers do not recognize them as the fi nal recipient of claim notice.
Coverage obligations are triggered only when the insurance company itself is notifi ed in accordance with the policy terms. Because carriers follow strict reporting requirements, informal or incomplete notice can leave the association exposed, even when everyone involved believed the issue had been handled.
What to Expect After a Claim Is Opened (Working with the Adjuster) Once a claim is opened, expect an adjuster to reach out, even for “notice only” claims. Their job is to gather details, confi rm the facts, and ensure the carrier understands the situation. They may ask for documents, photos, or meeting minutes. While repetitive, it’s all part of protecting coverage. If the carrier asks for information, delays can slow down the process and frustrate everyone. Responding promptly helps keep the claim moving effi ciently. The association benefi ts when managers and boards treat adjuster requests as a priority rather than a nuisance.
Practical Tips for Managers and Boards
When in Doubt, Ask Your Agent The fi rst call when there’s uncertainty should be to the association’s insurance agent. The agent can review the facts, recommend next steps, and clarify whether fi ling is appropriate. Carriers would rather evaluate a questionable notice fi led correctly than be asked later to justify coverage after the reporting window closes. Agents can also help determine which policy (Property, GL, or D&O) may respond, reducing the risk of misfi ling or assumptions that jeopardize protection.
Keep the Agent in the Loop The insurance agent does not need to be involved in every phone call, but should be copied on key written communications and updates. Keeping the agent informed helps ensure continuity, provides an additional layer of oversight, and supports the association if questions arise later in the process. Managers should ensure the agent is included in written correspondence so communication remains clear and consistent. This prevents communication gaps and ensures the association benefi ts from the agent’s guidance.
Filing a claim or giving notice isn’t a failure, it’s a protective step. Prompt, accurate reporting preserves coverage, keeps options open if the issue escalates, and avoids the risks of late reporting. Managers and boards that understand the process can approach claims with confi dence, relying on their insurance agent and maintaining clear communication throughout the claims process. Ultimately, proactive reporting protects the community by reducing stress, supporting informed decisions, and strengthening overall risk management.
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