Quite often, people living in a block of flats or along the same street may form a Residents’ Association or Residents’ Management Company. It’s a great idea to promote a sense of community and provide a united voice to deal with issues such as property services and maintenance. Sometimes, legal and financial matters may come under an association’s remit as well and, guess what?…anyone who has taken on a management or administrative role on the committee could end up being personally – yes, personally – liable if something goes wrong.
So the first reason for considering D&O insurance, as a Residents’ Association is simply this – it’s a way to avoid the strife, stress and financial implications for individuals who’ve nobly volunteered to help out on the committee (whether paid or unpaid), if one of the residents decides to sue.
Surely a group of residents will stick together in a crisis? You’d think so, wouldn’t you? Sorry, no, life doesn’t work like that. Here are a few horror stories to make your toes curl:
- Building Insurance blunder
An association secretary chose the building insurance for a block of flats but neglected to read the small print applying to unoccupied flats and a pipe burst in one, damaging the flat below.
The secretary was held personally responsible for failing to obtain adequate cover.
- Filing accounts fiasco
Companies House fined the directors of a Residents’ Management Association because they didn’t file the accounts on time.
D&O cover allowed them the funds to defend themselves.
- Squirrel damage disaster
A squirrel climbed into a building maintenance room via an overhanging tree and chewed up all the wiring. Action against the directors was attempted on the grounds that they had failed to maintain the tree properly!
D&O cover paid the legal costs in the successfully defended case
- Price drop penalty
Members of a Residents’ Association committee were sued because a flat dropped in value when it was to be sold. The resident alleged that the association had failed to manage a disruptive tenant in a neighbouring flat.
Legal costs ran to more than £10,000
- Libellous lapses
In a number of cases, directors have been sued for libel – for example, for writing a letter in response to some allegations against the board, or for claiming a failure to disclose conflicts of interest. The cost of legal advice and representation in these cases can really mount up.
Costs, sometimes as high as £35,000 have been covered by a D&O policy
And the seventh reason to have D&O insurance? You’d be mad not to!
For help and advice on buying the correct Directors & Officers cover call The Expert Insurance Group on 01825 745 410