Why do residents associations need D&O insurance cover?

Directors and Officers of residents associations often hold their positions as volunteers, out of goodwill, or as a part of their service as a managing agent. Many people don’t realise that when taking on this role they can become personally liable for the financial consequences of their actions and errors.

The law does not distinguish between actions on behalf of a residential management company and those of a Director of a FTSE 100 company. Directors can be held personally liable for the financial consequences of their actions and errors and face potentially unlimited personal liability.

Even the most prudent of Directors can make decisions in good faith which with the benefit of hindsight prove to be ill-judged. Ignorance is of course no defence in the eyes of the law.

What is covered?

Cover is provided for breach of duty, trust, contract, neglect, misleading statements and wrongful trading, acts or omissions. Costs that can be incurred include

Legal Defence Costs
Damages awarded against a director
Out of court settlements
Claimant’s costs and expenses
Legal advice
Legal representation

Who is covered?

Any Director, Officer, Employee, Shadow Director or Trustee presently or previously appointed by the association is covered for their actions whilst working on behalf of the organisation. This is deemed to include legal heirs or representatives.

Does the residents management company need to have other covers with Pi-Property insurance?

No, cover is available on a stand alone basis.