Dear Readers,

Unbeknownst to many, if you are the director or an officer of a residents’ association, you have a director’s liability and need to have Professional Indemnity Insurance, often referred to as PLI. This is even more important for those who have little to no experience acting in this type of capacity.
Directors and officers of a residents’ association act within positions of trust and must act accordingly. Anyone in such a position who acts negligently, in breach of their duty or outside their authority, may be held liable for any damages that result. There are a bevy of laws, rules, regulations and duties with which an association must comply and it isn’t always easy to keep up with the changes that occur.
The point is: it is very easy to make a mistake or miss something important. In doing so, you could be putting your personal assets at risk when confronting allegations of negligence in using reasonable care in executing your duties. Consider the costs: legal defence fees (even if you win) and damages could run in the tens of thousands of pounds or more.
By obtaining a relatively low-cost PLI policy, you are covered against breach of duty claims, neglect, omission, misrepresentation, shareholder derivative actions, employment actions and the like. Many residents’ associations and management companies are comprised of inexperienced volunteers who are doing their best to learn the ropes and all the responsibilities that go with it. It is important to protect them along with the reputation of the association.
It is important to ensure that any duties delegated to a managing agent are covered under any PLI policy. Whilst many agents have their own policies and may even be required to maintain them under any agreement with the association, you don’t want to be exposed in the event the agent’s insurance lapses or is cancelled without your knowledge. This could expose you to as much risk as having no insurance at all.

John Bishop

Tel. 020 3301 7815