Belinda Bagnall from Residentsline Flats Insurance details some claims that have been incepted on Directors and Officers Liability Insurance policies.
For many, fulfilling the role of a director or an officer within a Residents’ Management Company (RMC) is a voluntary role and often, those who are kind enough to step in are doing so with admirable intentions. However, if a poor decision being made and the consequences result in legal action, directors can be held personally liable.
Having a Directors and Officers Liability insurance policy in place is of great importance to those who manage a block of flats or apartments within the UK. Even with the best intentions, errors can occur, making it crucial to have legal protection in place in case something goes wrong.
Below Are Some Claim Examples:
- Tenants of a block of flats brought legal action against the Residents’ Management Company for failing to appoint a building company in a timely fashion. The external brickwork of the building needed reparation, as damage had been caused following a heavy rainstorm. This had been reported to the committee, however, repair work had not been commenced several months later when a subsequent rainstorm caused further damage.
- A Residents’ Management Company faced an allegation of wrongful termination after it fired an employee for gross misconduct.
- A Residents’ Management Company Director faced being sued as a result of a property being devalued following their decision to paint the exterior of the building an unusual colour.
- At a party in one of the flats, an over-crowded balcony collapsed, seriously injuring several people. A claim against the Insurance Company is incepted with a potential cost of £7.25 million, however the RMC only has £5 million Property Owners Liability cover in place. The individual flat owners are distressed as this amount is well below the potential cost of the claim. The flat owners believe that the RMC was wrong to reduce the cover and they bring legal action against the responsible director to make up the shortfall.
- An officer pays a contractor to fix their roof with RMC funds before the works have started. Subsequently, the contractor absconds with the money, never to be seen again. There is an exposure to potential legal action being brought by the individual flat owners following the loss of RMC funds due to a mistake made by an RMC member.
Finally…
Consider the potential exposure that may exist if an RMC officer fails to assess the number and extent of defects within a building, compounded by the fact that the RMC officer fails to lodge a claim within the time constraints of the NHBC framework. Funds required to rectify defects are no longer available but could have been covered by the NHBC guarantee. Once again there is an exposure to potential legal action being brought by the individual flat owners due to an error on the part of an RMC officer.
To get Directors and Officers Liability insurance cover today, please visit the Protect Your Directors with Residentsline website.
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