Would a small residents’ association be wise to insure against any possible risks, and what are those possible risks?
The FPRA replies:
As your association does not manage your block or own the freehold, your activities are relatively limited, and therefore your need for insurance is fairly limited. There are two main types of insurance that you could consider:
- Public Liability Insurance
This covers legal liability to third parties for injury or damage caused by the residents’ association. It is hard to see how such an injury or damage could occur as probably the only activities you are physically involved is attending meetings. These normally take place in a resident’s flat, and most household contents policies provide public liability cover for non-commercial activities.
If you wish to be extremely cautious you could ask your managing agent or freeholder to have the interest of the residents’ association noted on the building’s insurance policy which would include public liability cover.
- Directors and Officers Liability Insurance
As voluntary officers of a Residents’ Association, Directors and Officers Liability Insurance covers you for any legal action for your activities as officers and for any liabilities that the organisation may incur whilst under your control.
However, as you are currently only representing residents’ interests I think your need for this type of insurance is very limited.
However, if in the future you were considering taking over the management of the block or purchasing your freehold, or otherwise involved in the financial and legal direction of the property, I would strongly recommend that you take out Directors and Officers Liability Insurance.