Directors and Officers of Management Companies or Residents Associations of blocks of flats are usually unpaid volunteers who regularly carry out administrative duties and make decisions that relate to the running of the property.
These may include - but are not limited to - making decisions on maintenance issues, what to do about neighbouring planning permissions, who to bank with, parking and noise disputes and even on occasions how a lease should be interpreted. In addition there are the ongoing fiduciary and statutory duties incumbent on the Director of any company.
Should a decision be made (or possibly fail to be made) that as a result causes a financial loss, then the Directors and Officers of the block may find themselves being sued personally by a resident or a third party.
Directors and Officers Liability Insurance provides protection for the legal liability of individual Directors and Officers against claims for financial losses by residents or third parties arising from errors or omissions made by Directors and Officers of the Management Company or Residents Association.
Directors and Officers Liability Insurance is a policy solely for the residents representatives to protect them in the same way as a firm of solicitors would have Professional Indemnity insurance to protect them.
In these increasingly litigious times should an incident occur that may give rise to a claim for financial loss it is not unusual for legal action to be taken against all parties involved, including the Directors and Officers of the Management Company or Residents Association, collectively and individually.
Directors and Officers Liability Insurance is inexpensive because claims do not happen very often. However when they do, they can be very expensive. Just consider the cost of instructing a solicitor to refute even a spurious allegation, let alone current directors being sued for an error or omission of a previous director.
Flats Direct have negotiated a policy which covers all the Directors and Officers of the Management Company and costs £70+Tax for an indemnity of £50,000. Higher levels of cover are available.
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Charles Johnson at Stag RTM Company Ltd