Good intentions aren’t enough
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Why HOA boards need a risk-control culture
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Roughly one-third of the US population, about 33.6 percent or 77 million people, live in homeowners associations (HOA) or other types of community associations. Of those, an estimated 2.5 million individuals serve as volunteer board members or committee associates, helping to manage their communities.
Because these roles are voluntary and unpaid, there is often a mistaken assumption that formal policies, governance standards, and risk protocols are optional. That assumption can quickly translate into accusations of bias and costly claims.
For community associations, D&O risk control is not a binder on a shelf or a checklist reviewed once a year. It should be embedded in the everyday rhythm of governance. Board meetings, vendor negotiations, rule enforcement, and resident communications all carry potential exposure. In today’s increasingly litigious environment, good intentions are simply not enough.
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Ian H. Graham serves more than 5,000 insurance brokers representing 50,000+ community association clients. We have provided brokers and agents our quality products, simple processes, and experienced service for over 40 years.
“Even in the most well-thought-out and well-documented process plan, associations can still be sued, because it is often about the perception of a wrongful act rather than the existence of an actual wrongful act”
Josh Srnka,
Ian H. Graham Insurance (IHG)
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Published March 23, 2026
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“The world in which community associations operate is constantly changing, and the structure of community association governance must be regularly reviewed if it is to remain productive and protective”
Josh Srnka,
Ian H. Graham Insurance (IHG)
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As Josh Srnka, senior vice president of management liability (D&O) programs at Ian H. Graham Insurance (IHG), an Aon company, told IB: “The key is integration. It has to be part of what the association does on a daily basis. It’s really about turning those good intentions the board has in their decision-making into repeatable habits that are considered in every decision that’s made.”
From good faith to defensible practice Risk control for community associations is less about isolated policies and more about building operational muscle memory. Srnka added that embedding these practices includes documenting their actions, any sort of communication with the owners, vendors, and others who they’re working with, and the way projects, rules, and complaints are managed. Even when decisions are made in good faith and supported by a thoughtful process, associations can still face claims.
“Even in the most well-thought-out and well-documented process plan, associations can still be sued, because it is often about the perception of a wrongful act rather than the existence of an actual wrongful act,” added Srnka.
Many directors and officers (D&O) claims therefore arise not from catastrophic failures but from process breakdowns and perceived unfairness – issues that are especially visible in board decisions and enforcement actions.
Standardization as a defence tool One of the most effective forms of risk control is standardization. When boards rely on ad hoc approaches, they create room for subjectivity and inconsistency – conditions that often fuel claims.
“Board meetings should use standard agendas that identify high-risk items for potential D&O exposures and take extra care on those,” said Srnka, “ensuring appropriate care and documentation.”
It continues with formal protocols for major decisions, such as special assessments, large projects, or sensitive enforcement actions, so that the same decision-making process is consistently followed instead of shifting on a case-by-case basis.
“Having a formal and defined protocol for major decisions, and repeating the same processes without deviation, is critical because that standardization is what allows actions to be defended,” Srnka told IB.
Conflict of interest is one area where standardization and transparency are especially important. Vendor relationships involving a relative or business associate of a board member, for example, must be handled openly and with clear documentation. Addressing these situations “above board” helps prevent any perception of wrongdoing and supports the defensibility of the board’s actions.
Managing rule enforcement and power struggles Community associations often operate in what Srnka describes as a complex rule-enforcement culture, which naturally creates tension between boards and residents. That tension can quickly escalate when residents perceive that rules are applied unevenly or subjectively.
To mitigate that risk, he told IB, “It’s important that associations have a documented process in place that defines standard notices, timelines, and processes for escalation and also commit to apply those processes uniformly across all residents and situations.
“The process has to be fair and predictable; you don’t want there to be an opportunity for perceived bias or unfairness – otherwise disputes are almost inevitable,” added Srnka.
When residents believe they are being treated differently than others, even well-intentioned boards can find themselves defending D&O actions that arise from alleged unfairness rather than from actual misconduct.
Vendor relationships: procurement as risk control Most associations do not maintain in-house staff; instead, they contract out services such as landscaping, property management, and large-scale capital projects. Every vendor relationship introduces potential D&O exposure. To manage that exposure, procurement should be approached as a core risk-control function. This includes using structured requests for proposals and bid-comparison tools, documenting why one vendor was selected over another, reviewing insurance and contract terms to ensure that they are in line with the association’s risk profile, and setting clear expectations for performance and behavior.
Srnka pointed out that “associations must negotiate vendor contracts, manage projects, and be able to show why a specific vendor was chosen instead of another, because each of those situations presents an opportunity for allegations of wrongful acts if decisions are not transparent and well documented.”
Procurement discipline is therefore not just an operational best practice; it’s a critical component of a defensible risk-control culture.
Board turnover: protecting the risk framework from ‘reset’ Community association boards often rotate annually or every few years. Without a formal onboarding and education process, key practices can be lost, diluted, or inconsistently applied each time leadership changes. Effective risk control requires structured onboarding for new board members, ensuring that they understand their fiduciary duties, what constitutes a conflict of interest, and the fundamentals of fair housing and discrimination risk. It also depends on clear documentation of procedures so that new boards inherit working, repeatable processes rather than starting from scratch, and on ongoing education to reinforce standards and keep pace with regulatory and environmental changes. Board members are volunteers, not legal or risk experts, and that reality makes training and communication a core element of the overall risk framework.
The central role of education and communication D&O claims for community associations are often rooted in perceived unfairness or process failures rather than intentional misconduct.
“While D&O claims can involve catastrophic issues, they generally stem from process breakdowns or perceived unfairness; they do not have to involve intentional or malicious behavior but, instead, frequently arise from a perception of a wrongful act,” added Srnka.
A strong risk-control culture can de-escalate disputes before they become claims, improve the association’s position if a claim does arise, and clarify roles and expectations among boards, managers, vendors, and residents.
Communication is a critical enabler of that culture. Associations typically send a high volume of outbound communication to residents and vendors; to support risk control, those communications should be standardized, consistent, aligned with governing documents, and sufficiently transparent that stakeholders understand how and why decisions are being made. Srnka stressed that “communication must be fair and in line with governing documents and that there must be enough openness that residents and owners feel heard as stakeholders.”
Vendor communications should similarly set clear expectations for performance, behavior, insurance, and compliance, recognizing that both residents and vendors are stakeholders in the association’s risk profile.
Brokers and carriers as risk-control partners Insurance brokers and carriers play a key advisory role in shaping an association’s risk culture because they are often best positioned to explain the association’s specific exposures, what is and is not covered under existing insurance programs, and the behaviors and patterns that most commonly lead to claims.
“A broker’s ability to communicate the importance of coverage for directors and officers insurance, and to connect that coverage to the association’s everyday operations, is crucial,” said Srnka.
At Ian H. Graham, community associations have access to a wide range of risk-control resources and program solutions designed specifically. IHG supports more than 5,000 insurance brokers and over 50,000 community association clients with coverages that include D&O liability, crime and fidelity, property managers’ programs, and property insurance. These resources help associations move beyond basic coverage placement to a more proactive, culture-based approach to risk control.
Closing the gaps: governance documents and alignment Even well-designed frameworks can be undermined by outdated or misaligned governing documents. Over time, gaps can open between what the documents say and how the community actually operates, creating ambiguity and risk of dispute. Typical issues include bylaws and CC&Rs that do not reflect current statutory requirements, vague or inconsistent provisions that invite differing interpretations, and the absence of a formal schedule for document review and updates.
“It is hard to follow a practice if that practice is not well defined in a governing document, and the impact on directors and officers insurance is often seen in ambiguity or disputes over what is and is not allowed,” said Srnka.
Associations should therefore establish a regular review cycle for governing documents, seek appropriate legal and consulting support, and ensure that updated documents are understood and consistently applied by current and future boards. Even with well-crafted documents, boards must maintain consistency, transparency, and alignment in their decisions.
Training, documentation, and standardized enforcement processes are essential if boards are to understand the importance of consistency and documentation and know how to handle situations when issues start “going off the rails.”
Risk control in a dynamic environment Finally, risk-control culture cannot be static. Regulatory landscapes, privacy standards, technology, and communication channels continue to evolve – and so must community association governance. According to Srnka, it starts with adaptability.
“Associations need processes that anticipate change, including escalation paths for new or unforeseen issues and regular review mechanisms to identify emerging risks or outdated practices.” They also need access to expert resources, legal, insurance, and management to support informed decision-making when unfamiliar challenges arise.
“The world in which community associations operate is constantly changing, and the structure of community association governance must be regularly reviewed if it is to remain productive and protective. Whether the issue is statutory requirements, technology, privacy, or communications, there must be an expectation and awareness of change and its potential impact on risk.”
Ultimately, a strong risk-control culture is not about eliminating risk but minimizing risk. For community associations, a strong risk-control culture is built through consistency, documentation, transparency, and education – every day, in every decision.
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Source: Ruby Home Luxury Real Estate
Over 77 million people in the US live in a homeowner association community
67% of newly completed homes in 2024 are part of HOA communities, up 49% from 2011
Approximately 33.6% of the US population live in HOA communities
Houses in HOAs are worth 5–6% more than similar homes outside of HOAs
Typical HOA membership fees for single-family homeowners are $200–$300/month
The rise of HOAs in the US
Source: IHG
Crime and fidelity
Property managers’ programs
D&O liability
Property insurance
IHG: in Step with community associations
IHG offers products such as:
Source: IHG
Crime and fidelity
Property managers’ programs
D&O liability
Property insurance
IHG: in Step with community associations
IHG offers products such as:
Source: IHG
Crime and fidelity
Property managers’ programs
D&O liability
Property insurance
IHG: in Step with community associations
IHG offers products such as:
