The cover protects the Directors and Officers of Right To Manage leasehold/freeholds or residents associations. It will be individuals that administer and make decisions for their block of flats. They are usually unpaid volunteers that administer and make decisions that relate to the running of their flat block. These often include decisions on maintenance issues, planning permissions and company bank accounts. Also, parking, noise disputes and even on occasions how to interpret leases. They are not limited to these items as their roles can be wide-ranging and must comply with company law as well as Landlord and Tenant Law.
If a Director or officer makes a negligent decision that causes a financial loss. Those Directors and officers may find themselves being personally sued by a resident of the block of flats or a third party. It is rare, but it does happen.
Do I need to take out additional insurance?
It is a personal choice. Some policies will already have a level of cover within them. Therefore, it may not be necessary to take out an additional policy.
Most managing agents won’t get involved in company decisions and therefore this is what insurance is for.
Can I be personally sued?
Yes. Directors and officers liability insurance can seem expensive because claims are rare. However, when they do happen they can be very expensive. It is important to consider the potential saving in the case of a claim. As instructing a solicitor, even for an error or omission of a previous director can be very expensive. As the liability can be personally directed there are big potential downfalls.
What does my policy cover?
Your policy will cover the items listed below:-
- Legal costs of a claim or investigation incurred by you or your organization
- Any award or settlement made
- Employment, regulatory pensions, cyber, contractual, pollution and employee dishonesty claims
- Can include contract dispute and debt recovery pursuit
- Negative social media
- Public relation cost
- Circumstances related to investigation costs
Examples of what can happen: –
HM Revenue and Customs prosecuted a property investment company. The reason being that they were alleged to have made false statements in earlier tax investigations. Legal fees in the case came to more than £50,000
The directors of a property management company were called to give evidence following a pollution leak into a local river. The legal fees for the represented company were £10,000.
Breach of duty
Shareholders of a family run property group made a claim against the company and its Directors. They accused the property group of acting unfairly and breaching their duties. The property group sought an investment which reduced the value of the shares. The legal costs in the case were more than £150,000.00. A minimum settlement was eventually agreed.
What else will I get as part of my cover?
- There will be free access to a comprehensive range of specialist advisors, and advisory services. Offering support to help customers minimize risk and promote growth if required.
- There will be a team of experts working with customers to develop their business sustainability and responsibility for providing design innovation and ethical solutions.
- Knowledgeable and experienced legal teams available when customers need it most. The policy will provide full professional representation to help customers succeed and manage claims successfully.
- Other such incidents include:-
- Human resources and employment
- Health and safety
- Waste and environmental regulations
- Money laundering, fraud, bribery and corruption, anti-competitive practices.
- The cover with respect to intellectual property covers:
- Data protection and cybercrime
- Legal advice on a range of areas including Directors and shareholder duties, contract disputes, financial crime, motoring and criminal offences.
Directors and Officers Liability Insurance
It is easy to overlook the importance of Directors and Officers liability, but it can be vital if the need arises. The truth is that the individuals that volunteer for those positions are taking on a big responsibility. One that will affect the lives of everyone else that lives in the flat block. Therefore the potential financial liability is huge.
If you would like to discuss any of the above then request a call back to discuss your options. We can provide a separate policy or include the cover in a building insurance quote.
Date; 22nd of February 2019