Directors of blocks need insurance cover for both the overall company and the volunteer directors themselves. The law makes no distinction between a volunteer director/officer of a residents’ management company and an officer running a large commercial organization. Policy covers for this situation are referred to as Professional Liability cover.

The directors and officers of a residents’ management association make decisions that have a serious impact on the property of the lessees. Their actions and inactions in this regard often become the target of legal action, and without a professional liability policy, they become personally liable for any legal expenses and damages. This represents potentially unlimited personal liability on the volunteer member, all as a result of their meaning well without recognising the pitfalls and taking care to protect themselves.

Most officers and directors don’t realise the number of liability issues to which they are exposed as volunteer members. There is potential liability risk for wrongful acts and omissions (individually or collectively) by members, libel and slander, errors and omissions, safety and emergency regulation, discrimination, dishonesty of fellow directors for which all can be held liable, and breach of EU directives and regulations. This is a long list of potential pitfalls should you neglect professional liability cover.

Many insurers have policies specifically designed for directors and officers of residents’ associations. Zurich is one of many such companies. Some exceptions to these policies include claims of proven fraud, illegal profit, actual bodily injury, property damage, and cover to parent companies and for professional services. Bodily injury and property damage fall under the domain of a different type of cover: liability insurance.

It is important for residents’ association members, directors and officers to obtain all applicable cover for the property, the association itself, and the individual members. Consulting with an agent qualified in residents’ associations is an important step for ensuring you and your members are protected.

John Bishop
Tel. 020 3301 7815
johnbishop@colinbibra.com
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Twitter: @colinbibra