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Most residential buildings insurance policies have a minimum of £1,000 subsidence excess. However the excess for all other damage is usually negotiable.
RMC directors should always check that the description of the property
insured is accurate and includes cover for the outbuildings, gates, fences and underground pipes and cables that the RMC is responsible for insuring. Also, most policies are index linked to ensure the sums insured remain adequate - do confirm with your insurer that this is the case. In addition to buildings insurance, there are some specialist areas of cover that RMCs should also be aware of:
DIRECTORS AND OFFICERS: TAKE COVER
RMC directors or officers can be held personally liable for their actions
while working on behalf of leaseholders. Taking out Directors and Officers Liability insurance provides defence costs and/or compensation for civil liability charges relating to any “wrongful act” in connection with RMC matters. Such acts are defined as any actual or alleged:
Different policies may contain different definitions so do read the small print. There will also be exceptions to this type of cover – again these will differ but are likely to include:
Some standard policies – for example the one offered to property
owners by Aviva - include this type of cover as an extension to their buildings insurance policy. However, if your insurer does not offer this, it is worth finding a reputable company that specialises in Directors and Officers insurance to give you peace of mind that any cover you take out will be adequate for your needs. Gary Green from Angel Underwriting, a leading specialist on
Director and Officers insurance offers a cautionary tale, highlighting the problems that can arise where RMC directors do not have this type of cover. Leaseholders of a block of flats successfully 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
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caused further damage. This is the kind of situation that could easily have been avoided had the committee in question put an appropriate insurance policy in place.
GOT A LIFT? YOU NEED ENGINEERING INSURANCE AND INSPECTION
Most insurance policies taken out on blocks of flats will cover damage
to passenger lifts as a result of an insured peril such as fire, accidental damage and malicious damage. However these policies do not normally extend to damage caused by the breakdown of the passenger lift or to the legal requirement to have lifts regularly inspected. Enter the specialist Engineering Policy, which most of the leading
insurers offer. Such policies are designed to help property owners comply with their legal obligations to have their lift inspected by a competent authority - at six monthly intervals. A record of these inspections must be kept and/or a certificate issued.
TERRORISM: COULD YOUR BUILDING BE A TARGET?
Do we really know who our neighbours are? Even if you live in the quietest rural area and think your block of flats is never likely to be a target for terrorists, think again. Tempting, isn’t it, when arranging renewal of your residential buildings insurance, to leave out terrorism cover to save a few pounds. After all how could your property possibly be at serious risk of being a target for terrorist attack! Your building may not be a target but individual residents could be
threatened - if for example they are employed by a laboratory that uses animals for medical testing purposes. Or you could be living next door to a bomb maker – he or she wouldn’t exactly advertise the fact. A standard buildings insurance policy will not provide cover for a terrorist attack. However unlikely it might appear, if an incident did occur and
there was no insurance in place, the RMC directors could be held responsible. Don’t forget that directors have personal responsibility for their decisions and actions within the Residents Management Company. Taking out the appropriate cover is a small price to pay in comparison to risking your personal assets.
GETTING THE BEST FROM YOUR BROKER
In the next issue of Flat Living we will be looking at the pros and
cons of buying insurance through a broker and offering some tips to help you ensure your quote is as competitive and comprehensive as possible.
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