Tuesday, May 19, 2015

HOA insurer not obligated to defend suit against HOA board absent underlying liabiltiy claim, court rules

In the past, insurers were readily inclined to defend most any legal action brought against an HOA board of directors even if there was no underlying claim of liability or damages such a lawsuit seeking equitable relief ordering the board to comply with the governing documents or state or federal law.

That may be changing if a recent Kentucky case is any indication. A Kentucky federal district court ruled an insurer had no duty to defend a claim under an HOA policy's directors and officers coverage, reasoning that D&O coverage is intended to shield corporate directors and officers for personal liability and not to protect the corporate entity itself.

Click here for a summary of the ruling in State Auto Prop. & Cas. Ins. Co. v. Highland Terrace Counsel of Co-Owners, Inc., 2015 U.S. Dist. LEXIS 59663 (W.D. Ky. May 7, 2015) by Traub Lieberman Straus & Shrewsberry LLP.

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