Right-to-Manage Company combined Professional Indemnity/Directors & Officers / Trustees Insurance Cover
By becoming a Director of an RMC (Right to Manage Company), even if voluntarily, this exposes you personally to significant financial risk.
If you make a decision that causes a financial loss to someone, perhaps another leaseholder or a contractor, you could be held personally liable.
Liabilities that arise can include the failure of:-
- Complying with Certain regulations such as investigations (and fines) carried out by the Health & Safety Executive
- An avoidable injury suffered by a fellow leaseholder or visitor to the premises
- Appointing contractors and estimates go wrong, with shortfalls
- Losses of the value of flats within the Freehold.
Increasing litigation means a real increase in liability claims against Right to Manage Companies and their Directors & Officers.
Below are a few claims examples that have arisen.
- A director of a residents association breached his authority in appointing a company owned by a family member to undertake work on their behalf without disclosing his personal interest. Proceedings issued by the company for non-payment of fees of £42,000 following cancellation of the contract.
- Tenants of a block of flats brought an action against the residents committee for failing to appoint a building company in a timely fashion to repair external brickwork on the building. Damage had been caused following a heavy rainstorm and reported to the committee; however, repair work had not been commenced several months later when a subsequent rainstorm caused further damage.
- Directors appointed a Contractor to undertake essential works and improvements. Without consulting the other lessees, the Directors instructed the Contractor to carry out the works. Insufficient funds were available to cover the costs and the Directors were liable for the costs involved.
- A residential property management company faced a claim for discrimination after it was alleged that they had breached their statutory duty by not making their website accessible for blind people.