What is Association Shield? Is this insurance?

Association Shield is not a traditional insurance product. There is no deductible and loss history is not evaluated to determine coverage. In addition, it only provides coverage for the cost of defense for lawsuits filed in a Justice Court (commonly called Justice of the Peace or “JP” Court) and does not provide any indemnity coverage. In other words, an Association Shield policy covers the attorneys fees charged by the attorney for representation of the Association in the Justice Court lawsuit, but it does not cover filing fees, settlement costs, or any judgments that might be rendered against the Association by the Justice Court. Because Justice Court lawsuits tend to involve small claims with little to no damages, Association Shield covers the most expensive part of defending a Justice Court lawsuit, the attorney fees, and does so without a deductible.

What does an Association Shield policy cover?

Association Shield is a “cost of defense” insurance policy that covers the cost of attorneys fees in Justice Court lawsuits filed against the Association OR any board members by a member of the Association. What this means is that Association Shield covers the cost of hiring an attorney to defend the Association in up to two lawsuits (or “claims”) per year through resolution of such lawsuits at the Justice Court level. An Association Shield policy is not an “indemnity” policy and therefore, out of pocket costs, third-party fees (such as mediators), court costs, cash settlements, and monetary judgements are outside the scope of the coverage.

Who is covered by an Association Shield policy?

The Association and any current members of the Board of Directors are considered “Insureds” under the Association Shield policy. Each claim covers one lawsuit but does not have a limit on the number of Insureds named. This means that the Association AND all current board members named in up to two separate lawsuits are covered by the Association Shield policy. Past board members, community volunteers, and community managers are outside the scope of coverage.

How much does an Association Shield policy cost?

Our pricing is based upon the size of your community. This is calculated by the number of units, commonly referred to as “doors.” For example, a community with 350 single-family homes would have 350 doors. This may also apply to condominium, townhome, duplex, or garden home communities. While there may be fewer actual buildings, it is based on the number of individual units.

Communities with 250 or less doors: $500 per year.

Communities with 251-500 doors: $750 per year.

Communities with 500 or more doors: $950 per year.

What is the difference between an Association Shield policy and a directors and officers liability policy?

A directors and officers liability policy typically covers both cost of defense and indemnity for lawsuits filed against an Association in any federal or state court. Such policies usually include a deductible of a $1,000 or more per claim, and any claims for coverage under a directors and officers liability policy may result in non-renewal of the policy or significantly increase its premiums. An Association Shield policy only applies to lawsuits with no damages or small claims filed in a Justice Court and there is no deductible. In addition, an Association Shield policy only covers the cost of defense through resolution of the lawsuit at the Justice Court level.

Should an Association purchase an Association Shield policy if it already has directors and officers liability insurance coverage?

Yes. An Association Shield policy does not replace a traditional directors and officers liability policy, it supplements it. In today’s liability insurance market, premiums are on the rise and so are deductibles because of claims and increased risk of liability. When a Justice Court lawsuit is filed against an Association, it must decide whether to submit a claim on its directors and officers liability policy for coverage of a small claims lawsuit, which will involve paying a deductible and potentially cause an increase in premiums, or to self-fund the cost of defending the Association in the small claims lawsuit. Association Shield provides a third option by making available to Associations a no-deductible cost of defense insurance coverage policy for up to two of these small claims lawsuits at an affordable annual cost that is less than the typical deductible of a single claim under a directors and officers liability policy and without the potential risk of increasing the premium for the Association’s directors and officers liability policy.

Who should purchase an Association Shield policy?

All community associations in Texas, including community associations that administer subdivision developments, condominium developments and/or townhome developments, whether professionally managed or self-managed, are encouraged to purchase an Association Shield Policy.  

Who do I contact with questions?

Questions regarding coverage, payments, or plans should be directed to info@association-shield.com.

Claims should be directed to claims@association-shield.com.