What D&O covers
D&O insurance covers claims that directors and officers committed a "wrongful act" in their role, such as a breach of duty, error, omission or misleading statement (see IRMI's D&O definition). For a board, the most valuable part is often defense: lawyers' fees add up fast, even when the board did nothing wrong.
The kinds of claims boards face
- Disputes over admission decisions or sublet and renovation approvals.
- Shareholder or unit owner suits over assessments, budgets or repair decisions.
- Claims of discrimination or unequal enforcement of house rules.
- Disputes with contractors, managing agents or neighbors over board actions.
Who is insured
A board D&O policy typically covers current, former and future directors and officers, and usually the co-op or condo entity itself. Many policies can extend to committee members and, sometimes, the managing agent while acting for the board. Check the definition of "insured" in your policy.
Why New York boards care about indemnification
Most NYC co-ops are business corporations, and New York's Business Corporation Law lets a corporation buy insurance to fund indemnification of its directors and officers (BCL §726). Condominiums are governed by the Condominium Act (Real Property Law, Article 9-B) and their bylaws. In both cases, the governing documents say when the building will indemnify board members, and D&O insurance is what pays for that promise.
Common exclusions to know
D&O policies generally do not cover bodily injury or property damage (that is general liability), and they exclude deliberate fraud and illegal profit. Some board policies exclude or limit claims about construction defects, failure to maintain insurance, or claims between insured persons. Read the exclusions with your broker before you renew.
How much limit?
It depends on the building's size and history. Lenders may set a minimum. For example, Fannie Mae requires co-op borrowers to carry D&O of at least $1 million with a deductible no higher than $50,000 (Fannie Mae Multifamily Guide, §503.05).
Frequently asked questions
Does the building's general liability policy cover the board?
Only for bodily injury and property damage. Decisions about money, admissions, rules and repairs are covered by D&O, not general liability.
Is D&O required by law for co-ops and condos?
Not by a general rule we know of. It is usually required by the building's lender or recommended by its attorney, and most boards would not serve without it.
Does D&O cover the managing agent?
Sometimes, while the agent is acting on the board's behalf, depending on the policy wording. The managing agent should also carry its own professional liability insurance.
What is a claims-made policy?
Most D&O policies are claims-made: they cover claims first made while the policy is in force. Switching insurers without care can leave a gap, so we review prior-acts dates when moving a policy.
Sources
- IRMI glossary: directors and officers (D&O) liability insurance
- NY Business Corporation Law §726: insurance for indemnification of directors and officers
- NY Real Property Law, Article 9-B (Condominium Act)
- Fannie Mae Multifamily Guide, Part II, Chapter 5: Property and Liability Insurance
General information, not legal advice. Rules and guides change; your policy, bylaws and loan documents control. Checked October 16, 2026.