Directors and Officers Insurance for Flats
Whilst most owners and freeholders of flats remember to insure the buildings not many realise that other important covers are also available. In particular in you manage a purpose built block, you should consider taking out a little known policy known as director officer insurance. So, what is directors and officers liability insurance cover, well in simple terms it is an insurance cover that provides a protection for company directors, officers and managers against claims arsing from their decisions and actions taken whilst managing their business. In the case of a property management company of flats, the business, is running the flats themselves.
Alas, sometimes being a director of your flats management company is a thankless task, almost always unpaid and even the most careful director can make decisions which can have serious consequences. In the eye of the law, no distinction is made between a well meaning volunteer and a professional director. Not many individuals realise the seriousness of the situation and without doubt, individuals could face claims for unlimited sums of money. Director officer insurance is not expensive and anyone acting on before of the management group should insist that a policy is purchased.
Whilst acting in the role of director or officer responsible for a high rise purpose built flats, certain duties are established through statutes.
- Duty of Care- This is a simple common law duty of care that requires all directors to always act with the ‘care an ordinary man would apply in the same circumstances if acting on his own behalf’. When delegating duties to another person, the director must be satisfied that the person charged with the responsibility is suitably experienced.
- Fiduciary Duty– All directors must act honestly and in good faith and for with the companies best interests in mind. Directors must insure they have no conflict of interest.
- Statutory Duty– Any new director should frequent themselves with the various statutes that effect them including the companies Act 1985. Insolvency Act 1986 Financial Services Act 1986 Environmental protection Act 1990. Health & Safety at Work Act 1974. There are others and there are many books written to assist directors with their responsibilities.
If you are responsible for your flats in a block, you will face many responsibilities as well as the above. You will need to make sure that any lifts in the building are kept in a good state of repair and that they are regally inspected in line with statutory requirements. You will need to exercise care when appointing contractors to make sure that their work is of a sufficient standard. You will also need to make sure that the company finances are kept in order.
The cover provided under a director officer insurance policy is in respect of breach of trust, duty or contract, neglect, misleading statements or wrongful acts or omissions.. The policy will provide cover for any person presently or previously employed as a director or officer, their legal heirs or representatives and any employees of the residential management company. Cover will include these sections;
- Legal Defence Costs
- Damages awarded against a director ( but not fines)
- Out of court settlements
- Claimants costs and expenses
- Legal Advise
- Legal Representation
To better understand these type of insurance, so examples of claims are listed below