This article was produced in partnership with Kevin Davis Insurance Services, part of Amwins Underwriting.
Community associations are staring down a management liability environment that is changing faster than many volunteer board members can keep up with.
New technologies, new regulations, and new stakeholder expectations are colliding with governing documents written decades ago, creating exposures that did not exist even five years ago.
According to the specialists who insure this niche, the biggest liability risks today revolve around non-monetary, emotionally driven claims that can still trigger high legal defense costs.
Whenever a new technology or compliance requirement is introduced, it often disrupts established processes and can lead to the emergence of liability claims,” explained Kevin Davis (pictured on the left), president of Kevin Davis Insurance Services (KDIS), one of the largest underwriters of community association D&O liability in the US.
Unlike corporate D&O, where claims typically involve shareholder suits and monetary damages, community association claims are frequently triggered by written demands alleging unfair treatment, unequal rule enforcement, or breach of fiduciary duty.
“The number one claim is breach of fiduciary duty,” said Davis. “Most of the time, no one is suing for money. They’re demanding that the board stop doing something – move a landscaper’s hours, reverse a parking decision, allow a service animal, or change a rule they believe is discriminatory.”
That nuance makes policy wording critical. A D&O form that defines a claim only as a “suit for damages” may not respond.
For Davis, who has been underwriting association risks since 1981, the spike in new exposures is resulting in more board disputes, discrimination allegations, election challenges, and arguments over rule-enforcement.
Emerging technology is reshaping the risk landscape in ways most associations never anticipated, warned Veraliz Castro-Williams (pictured on the right), chief operating officer at KDIS.
Electric vehicle charging stations, drone usage, smart-entry systems, and even board reliance on ChatGPT are all producing new kinds of exposures. Some issues are logistical, such as who pays for EV installation or what happens when a shared charger replaces a deeded parking space. Others are liability-based: fire exposure, property damage, or cyber risk tied to connected devices.
“The problem is that many boards either ignore the issue or take action without consulting professionals,” Castro-Williams told Insurance Business.
“They’ll say, ‘Sure, let’s add EV chargers,’ but never ask the attorney, the property manager, or the insurance agent what the liability impact is. Subsequently, if an individual alleges discrimination because of being mistreated for the loss of property rights, the situation may escalate into a Directors and Officers (D&O) insurance claim.
AI has also introduced a more surprising risk: volunteer board members bypassing legal or insurance guidance because a chatbot told them they were compliant.
“Instead of asking a lawyer whether they can run a virtual board meeting, they ask AI,” Davis said. “But if their decision is challenged, there’s no defensible position. You can say, ‘I followed my attorney’s advice.’ You can’t say, ‘I followed ChatGPT.’”
One of the biggest and most overlooked liability triggers is the use of governing documents written decades ago. Some may still contain discriminatory language, obsolete voting requirements, or procedural rules no longer aligned with state law.
Davis recalled a case in which a board had never updated documents drafted in the 1960s – language explicitly barring ownership by certain groups was still in place.
When a resident filed a discrimination complaint, the insurer discovered the language was still enforceable. “It could have been avoided with a document review,” Davis said.
Other common document-related claims include:
While state statutes technically govern associations, Davis argued the real enforcement power now lies with lenders and insurance carriers.
“States have laws around reserve requirements or maintenance, and some have structural inspections, but enforcement is weak,” he explained. “Boards ignore them because no one enforces action. But a financial institution can say, ‘You’re not getting a loan unless you’re adequately reserving.’ An insurer can say, ‘We cannot offer terms unless the association is in full compliance with state requirements.’ That’s where compliance becomes real.”
Castro-Williams sees the same trend: “For years, associations deferred maintenance because no one made them fix it. Now, lenders and insurers are saying, ‘No reserves? No funding. No coverage.’ That’s changing behavior faster than legislation ever did.”
Unlike property insurance, D&O capacity for community associations remains steady.
“We’re a frequency-driven business, not severity-driven,” said Davis. “Claims are $30,000, $50,000, not $5 million. So yes, there’s still capacity… but rates are not flattening. There are still pockets of rate need based on geography and exposure basis.
When it comes to D&O coverage, Castro-Williams said associations should start with finding the right agent who will work collaboratively to find the right policy.
“The first thing a board should do is work with an agent who actually specializes in community associations,” she said. “You want someone who understands the risk, the documents, and the claims.”
From there, she said, boards should demand:
Both experts stressed the importance of community boards continuously educating themselves, documenting thoroughly, and seeking professional advice.
“Volunteer board members need to understand the scale of the responsibility they’ve taken on,” Davis said. “Even if they aren’t being paid, they are still running a business.
“If a community has 100 units, and each is worth $500,000, that’s a $50-million corporation they’re overseeing – not a social club. Their decisions must reflect that level of fiduciary responsibility.”
