Belinda Thorpe, Managing Director of Residentsline provides us with what we need to know about these sometimes overlooked insurance products.
There are areas of optional cover that some Residents’ Management Companies (RMC) decide not to take out, a brief summary of the most important areas follows:
- Directors and Officers Liability Insurance
- Terrorism Insurance
- Employers Liability
Directors and Officers Liability Insurance
This valuable cover protects the Directors and Officers of a RMC, Residents’ Association or RTM Company against “Wrongful Acts”, errors or omissions in the running of the management of the block of flats for which they are responsible.
Directors and Officers should be aware that they can be held personally liable for their acts, errors or omissions and that the law does not distinguish between the director or officer of a RMC, Residents’ Association or RTM Company and that of a major corporation. Surprisingly some directors choose not to protect their personal wealth with a Directors and Officers policy.
Recently leaseholders of a block of flats successfully brought an action against the residents’ committee for failing to appoint a building company in a timely fashion to repair external brickwork on the building. Damage had been caused following a heavy rainstorm and reported to the Committee, however repair work had not been commenced several months later when a subsequent rainstorm caused further damage. The consequent costs and legal charges resulting from damages awarded by the court and paid from RMC directors’ personal assets could have been avoided had the RMC taken out Directors and Officers Liability insurance.
It only takes a couple of minutes to obtain a quote…simply visit https://www.directorsandofficersliability.co.uk/
Terrorism: Could your building be a target?
Do we really know who our neighbours are? Even if you live in the quietest rural area and think your block of flats is never likely to be a target for terrorists, think again. Tempting, isn’t it, when arranging renewal of your residential buildings insurance, to leave out terrorism cover to save a few pounds. After all, how could your property possibly be at serious risk of being a target for a terrorist attack!
Your building may not be a target but individual residents could be threatened – if, for example, they are employed by a laboratory that uses animals for medical testing purposes. Or you could be living next door to a bomb maker – he or she wouldn’t advertise the fact. A standard buildings insurance policy will not provide cover for a terrorist attack.
However unlikely it might appear, if an incident did occur and terrorism insurance had been refused not only could your residents have to continue paying mortgages on non-existent property whilst needing funds to rebuild but the RMC directors could be held responsible. Don’t forget that directors have personal responsibility for their decisions and actions within the Residents Management Company. Taking out the appropriate cover is a small price to pay in comparison to risking your personal assets.
Employers Liability
The Employers Liability (Compulsory Insurance) Regulations 2008 requires that Employers, for any Company with Directors and/or Employees (even if only one and unpaid) have Employers Liability Insurance. Failure could result in a fine of up to £2,500 per day for each day that cover is not in place. Most blocks of flats are managed by directors and either employ or have residents who provide cleaning, gardening or administration duties – make sure your RMC is protected.
What to do if your owners want to opt out of certain covers you feel should be considered….. It is important that the leaseholders are made aware and accept that you as directors will not be held responsible for their decisions; a draft letter should be forwarded to each owner, along the following lines:
On …date… the leaseholders of XXX Ltd decided against effecting the following insurance covers:
- Employers Liability Insurance
- Terrorism Insurance
- Directors & Officers Liability
The leaseholders of XXX Ltd (list of whom are shown below) will not hold the shareholders/decision makers responsible for any losses that may be due to us not effecting these insurance policies.
And make sure all flat owners sign it.
Belinda Thorpe is the Managing Director of Residentsline whose sole focus has always been blocks of flats. You can contact Belinda and her team on 0800 281 235.
