Office Bearers Liability Insurance - a nice to have or a need to have?
Most owners of a property within a Strata building realise the tremendous value Strata Insurance offers because of the extensive cover it provides as far as common areas like gardens, lifts, pools, driveways and balconies.
However, there is an extremely important component of Strata Insurance that is just as important as caring for the building itself and that is 'Office Bearer' Liability Insurance.
The importance of Office Bearers Liability Insurance
Many of those who take on the usually voluntary 'Office Bearer' roles of Chairperson, Treasurer or Secretary of a Body Corporate do not realise that taking on such a position immediately exposes them to potentially enormous personal risk.
Indeed, when taking on the role of Office Bearer, a person can be held personally accountable for any legal actions brought by members of the Body Corporate and this is even if the Office Bearer is innocent of any wrongdoing.
Just as a Company Director should consider having Directors and Officers Liability Insurance, Office Bearers too need to have the right insurance to protect them from potential risk. Strata Insurance typically includes Office Bearers Liability Insurance as an optional extra.
The following real-life examples illustrate the potential legal risks and exposures that Office Bearers can face on a daily basis:
- Case Study 1 - When an over-crowded balcony collapses during a party at an apartment block, injuring many people and resulting in claims totalling $15 million, this particular building's Body Corporate didn't have enough Public Liability cover in place. The Body Corporate's cover was only to $10 million, so the building apartment owners brought legal action against the Office Bearers to cover the $5 million short fall.
- Case Study 2 - A Body Corporate Chairperson approves the building of a pontoon that faces a waterway but did not seek local Council and Waterways Authority approval. As a result, the Body Corporate is asked to remove the pontoon with significant expense. Consequently, the owners of the apartment complex end up suing the Body Corporate Chairperson for the cost of removing the pontoon.
- Case Study 3 - An Office Bearer decides to take a holiday before a booked contractor is due to conduct building works. That Office Bearer pays the account for work before going on holidays and the contractor subsequently flees with the money before completing the building work. The Office Bearer was sued and forced to come up with the money before completing the building work. The Office Bearer was sued and forced to come up with the money to pay a new contractor to conduct works.
What level of coverage should I take?
As Office Bearers go about their duties, the financial exposures and risks to them can be enormous. It makes good business sense to have protection in place for if and when things go wrong.
Most Strata Insurance policies will offer Office Bearers Liability Insurance as an optional cover to protect them against losses that might arise from alleged wrongful acts committed in the course of their committee duties.
Based on Coverforce's extensive experience in managing the requirements of strata managers and owner's corporations over the last 20 years, we would suggest that the level of cover should be the maximum that they can afford. Talk to one of our insurance brokers to find out more.
Important points of consideration
- Each state and territory have different legislative requirements regarding Strata Title Insurance. Make sure you check the conditions of your state.
- A body corporate will usually arrange Strata Title Insurance on an Office Bearer's behalf, but it's worth checking your specific coverage and requirements.
- Although Strata Insurance includes common contents, property owners need to have their own contents cover for belongings and any areas Strata Insurance doesn't cover. Talk to a broker about what is and isn't included in your policy.
How Coverforce can help
If you have an Office Bearer role on a Body Corporate you should consider Strata Insurance as a priority and make sure that Office Bearer Liability Insurance is included.
Coverforce has a dedicated strata insurance team providing comprehensive reports, quotes and recommendations from specialist strata insurance brokers. For more information or to arrange cover, please contact our qualified team of insurance brokers at our Coverforce Office.
Alternatively, you can simply fill out a Strata Title Insurance Quote Form below and one of our insurance brokers will get in touch with you within one business day.
The information provided in this article is of a general nature only and has been prepared without taking into account your individual objectives, financial situation or needs. If you require advice that is tailored to your specific business or individual circumstances, please contact Coverforce directly.
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