Typically, a residents association is established by a group of property owners or tenants in a block of flats who act with the best interests of all the flat owners or leaseholders in mind. The association will either deal directly with the property owners managing agent or alternatively manage the freehold for the group.
Understanding RA Risks
While managing the property and Block of Flats Insurance may be a key duty, there are often other areas of insurance cover with can often be overlooked and it is important to understand the duties of acting as an officer of the association.
Although a residents’ association (RA) caters for the well-being of the community, its purpose and objectives can differ on a daily or weekly basis – from dealing with general members’ interests, community safety and neighbourhood crime, to planning and licencing issues.
As such, it is imperative that you understand the details of your association’s cover and shape it to meet your association’s exacting needs.
Residents’ Association Insurance – The Basics
A gap which is often missed in an associations cover is the personal risk to the directors or officers. If you take up a position managing the affairs of others, you could find yourself personally at risk of a legal challenge should a member disagree with your actions or a group action against the entire committee.
With this in mind, you should ensure that you purchase Directors and Officers Insurance in addition to standard property and liability insurance policies.
Does the association employ anyone or use the services of sub-contractors? Do you need cover in this regard? Do you organise events or meetings? Do you hold or collect money? All of these areas should be considered in terms of your Residents Association Insurance.
Scope of Insurance Cover and Filling The Cover Gaps
To identify where your Association is most vulnerable, think about every action and function your RA carries out; nearly all of these interactions can be a source of liability for the community. Consider the following common types of RA cover:
#1 Property Insurance
If the association is responsible for covering the freehold of a block, then specialist Block of Flats Insurance cover is available. This can be extended to cover other areas of the property such as communal contents or items in the open.
#2 Directors And Officers Insurance
D&O liability covers a Residents Association if it (or the individual directors) issued for misappropriated funds or officer negligence. Cover will also ensure that the members of an RA will not be held responsible for the actions of one officer.
Typically Directors and Officers provide legal representation but excludes cover in the event of proven fraud or illegal profit.
#3 Employers liability Insurance
Employer Liability is mandatory if an association has any employee, such as a gardener or handyman. It indemnifies employers against costs associated with disease or bodily injury that employees suffer on the job.
#4 Public liability Insurance
Public liability or Property Owners Liability will apply to common or shared areas. It will protect your group if an outside party is injured, for example the postman trips over a loose carpet tile and breaks his ankle.
If you arrange building cover for the flats, then you may find that property owners liability is provided as standard. However, you may need a bespoke public liability policy depending on whether you represent a group of houses in a community or a block of flats
For example, an RA with members exclusively from a block of flats should consider insuring its common areas, such as the foyer.
#5 Employee Dishonesty or Crime Cover
Dishonesty or Crime Insurance cover protects the community from several kinds of theft and fraud perpetrated by its officers or employees. Even though you may be a well-intentioned member, all it takes is one unscrupulous officer or employee to act with illicit intent and you could find the association suffers a significant financial loss.
#6 Additional Covers
Other areas of cover can include libel or slander, legal expenses, professional indemnity, personal accident, money and more. Whether or not your community’s RA operates as a business, it probably still holds assets that would necessitate contents or monetary policies.
Most RAs require flat owners or members to pay membership fees to help pay for meeting expenses, publicity, refreshments and various initiatives. RAs should work to safeguard the equipment and money they possess.
FREE Insurance Review
The variety and depth of Residents Association Insurance cover can be daunting and difficult to navigate. Insync specialises in all areas of property cover including Block of Flats Insurance and bespoke Residents Association risks.
You can request a quotation online, alternatively, why not book a free review with one of our expert Gurus who can ensure you find the right level of cover at the right price.