Here’s a quick guide to the most common insurances we deal with as a managing agent:

  • Buildings insurance
  • Directors and officers insurance
  • Legal cover

Buildings insurance

What does it cover?

For blocks of flats, buildings insurance is usually arranged by the managing agent, the freeholder or the resident management company (RMC). This covers the structure of the building, but not the contents of individual properties. Leaseholders and residents need to arrange their own contents insurance.

Why is it needed?

It’s really important that your building is protected and to make sure that it has the best and most appropriate insurance in place. Whoever manages the buildings insurance will also need to do a reinstatement cost assessment (RCA) every 3-5 years to ensure an up to date insurance revaluation is provided to the insurance provider. This helps make sure your building is insured correctly.

Directors and officers (D&O) insurance

What does it cover?

D&O liability insurance is an insurance cover that offers financial protection to directors and officers of a company. So, if you are a director of a resident management company, this applies to you. D&O insurance will cover the cost of claims for compensation made against the insured individual(s).

Why is it needed?

Directors and officers can be held personally liable for their actions in carrying out to company duties. They can be the subject of claims which could lead to the payment of fines, compensation or even imprisonment.

What are the chances of a claim?

There are over 200 possible offences in the Companies Act 2006 where a director can be held personally responsible, and many other statutes and regulations where liability can also be incurred.

Claims can come from creditors, residents or anyone else who comes into contact with your company. You may even be held responsible for the actions of other directors as a result of financial mismanagement.

Legal expenses

What does it cover?

Legal Expenses for First-tier Tribunal provides cover to meet the legal costs of defending any applications made to the First-tier Tribunal by a leaseholder. Again – this is an important insurance for RMC directors to have in place.

The First-tier Tribunal deals with leasehold disputes which can include service charges disputes, repairs, extending leases or buying the freehold. The disputes are not always between freeholders and leaseholders; leaseholder can take their Resident Management Company (RMC) to a First-tier Tribunal. The role of the “landlord” will usually be defined in the lease.

Why is it needed?

Residential landlords may be liable for their own legal costs in a First-tier Tribunal. This can be the case even where the Tribunal rules in their favour and where there is no question of negligence attributable to individual RMC directors.

The landlord can also be prevented from recovering legal costs from service charges, which are often the sole source of income for an RMC.

In many scenarios it is proving more cost effective for landlords to choose not to contest the leaseholder complaints where their own legal defence costs are more expensive than the maximum remediation ruling.