If you are a Strata Manager acting as an Office Bearer or someone who is currently fulfilling Office Bearers duties for an Owners Corporation then these frequently asked questions should provide insight into how necessary this “optional” cover is.
What is Office Bearers Liability Insurance?
Office Bearers Insurance is an important cover designed to provide protection to the Owners Corporation Committee members against losses arising from alleged wrongful acts committed in the course of carrying out their duties as the committee. In what is becoming an increasingly litigious society, all Owners Corporation Committees should have the appropriate cover for this type of risk exposure.
Should Owners Corporations take out Office Bearers Liability Insurance?
Yes. Although this cover is not currently compulsory, Whitbread strongly recommend Owners Corporations select the Office Bearers Liability section of the Strata Insurance policy as an additional cover.
If I am a Strata Manager, am I covered by this policy?
You will only be covered by this policy if you are acting in the capacity of an Office Bearer.
If the Owners Corporation takes out Office Bearers Liability Insurance, what is the committee covered for?
The Office Bearers Liability policy section offers financial protection against allegations of wrongful acts, errors or omissions that may occur while fulfilling Office Bearers duties. Special policy benefits include payment of legal defence costs to cover legal fees and any other charges and expenses within the limit of the sum insured.
How much cover does the Owners Corporation Committee require?
It is part of the committee’s role to decide the appropriate amount of cover, although Whitbread are happy to provide our recommendation on the level of cover required to fit specific circumstances.
We generally advise clients to select a minimum cover limit of $1,000,000.
Who can make a claim against the Owners Corporation Committee?
Anyone that has suffered a loss arising from a wrongful act committed by a committee member.
What if the committee has acted in good faith or feel they have done nothing wrong?
Regardless of whether the committee is at fault or not, they may still incur costs to defend themselves. These costs generally form part of an Office Bearers Liability Insurance claim. Please note that limits apply. Refer to the specific policy schedule / wording for applicable details.
What should an Owners Corporation Committee do if they receive a letter of demand?
First, it is important for the committee to understand that not all letters of demand will come formally from a solicitor. They can come directly from a third party in the form of a letter, an email or even a conversation.
As soon as the committee is made aware of any potential claim against them, they need to understand that prompt notification to their insurance broker is absolutely imperative. Once notified of a potential claim, the Owners Corporation or Strata Manager, must contact their insurance broker as soon as possible to be advised of the appropriate next steps.
Why is timely notification critical when a potential claim is known?
Office Bearers Liability Insurance covers are issued on a “claims made” basis. This essentially means that the policy only provides cover in the event that a claim is made against the committee during the policy period of insurance and then notified to the relevant insurer during that same policy year. Failure to do so, is likely to result in the insurer not accepting the claim.
An Office Bearers Liability policy also indemnifies potential future claims arising from a circumstance that comes to light during the period of cover, provided that the circumstance is notified to the relevant insurer during the same period of cover.
Can the Owners Corporation Committee engage their own lawyer?
Most insurance policies will only cover legal defence costs if they have been pre-approved. The committee should speak with their insurance broker before they engage the services of a lawyer.
Does Office Bearers Liability Insurance carry an excess?
In most cases, yes. Refer to the relevant policy schedule / wording for further details, or speak to the Whitbread insurance broker managing the policy.
What if the amount being claimed is under the insurance policy excess?
Regardless of the claimed amount, the policy is triggered by notification. Therefore, timely notification is critical. An excess will not be applied unless a claim is paid.
When it comes to Office Bearers Liability Insurance, Whitbread recommends the following:
|Ask your broker to help explain to your committee members the risks associated with omitting Office Bearers Liability Insurance.
||Don’t wait until the committee has received a solicitor’s letter before you contact your insurance broker. Early notification is critical.
|Check your policy cover and excess.
||Don’t assume you can resolve the situation on your own.
|Contact your insurance broker as soon as you are aware there may be a potential claim.
||Don’t ignore the situation and hope it goes away.
|Seek your insurer’s approval before incurring any legal costs.
||Don’t hesitate to contact your insurance broker to ask ANY insurance question. That’s what we are here for.
For more information on Office Bearers Insurance, please contact Whitbread Insurance Brokers on 1300 424 627.
This insight article is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number: 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.