Indemnification
A contractual or legal obligation to compensate another party for losses or damages. In the HOA context, governing documents often include indemnification provisions that protect board members from personal liability for good-faith decisions. Vendor contracts typically include indemnification clauses requiring the vendor to cover losses arising from their work. Directors and officers insurance supplements indemnification protections.
Related Terms
Frequently Asked Questions
Are HOA board members personally liable for decisions?
Board members are generally protected from personal liability for good-faith decisions through indemnification provisions in the governing documents and directors and officers (D&O) insurance. However, indemnification does not protect against fraud, self-dealing, or gross negligence. It is important for associations to maintain adequate D&O insurance coverage.