In disputes involving enforcement of governing documents, can D&O insurance provide defense for the board?

• A. Yes, D&O may defend the board in such cases.
• B. No, D&O never covers governance disputes.
• C. D&O only covers property damage claims.
• D. D&O handles all construction disputes.

Answer: (A)

D&O insurance is designed to protect directors and officers from claims arising out of their governance responsibilities, including how the association enforces its governing documents. When a board enforces covenants, rules, or architectural guidelines and a party alleges mismanagement, breach of fiduciary duty, or other governance-related wrongdoing, those are the kind of claims D&O is meant to defend.

This coverage typically pays for defense costs, and may also apply to settlements or judgments, up to the policy limits, as long as the claim falls within the policy’s terms and exclusions. The key idea is that governance actions—decisions about enforcing documents and how the board exercises its duties—are exactly the kind of matters D&O is built to protect.

Keep in mind that exclusions can apply, such as for fraud, illegal acts, or intentional wrongdoing. And other types of disputes, like property damage or construction disputes, are usually handled under different insurance lines. But for disputes solely about enforcing governing documents and the board’s governance decisions, D&O can provide defense.