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Office Bearer’s Insurance

As an executive member of an Owner’s Corporation, it may be worth considering taking out Office Bearer’s Insurance. Such insurance provides financial protection in the event that Committee members become personally liable for actual or alleged wrongful acts.

There is legislation regarding Office Bearer’s Insurance in the Strata Schemes Management Act 1996 Section 88.

What other insurance may an owners corporation take out?

(1) An owners corporation may insure any property that it is not required to insure by this Part and in which it has an insurable interest.

(2) An owners corporation may take out insurance, at its own expense, in respect of either or both of the following:

(a) damage to property, death or bodily injury for which a person holding the office of chairperson, secretary, treasurer or member of the executive committee of the owners corporation could become liable in damages because of an act or omission, committed or omitted in good faith, in performing the functions of that office,

(b) misappropriation of money or other property of the owners corporation.

While the clause states obtaining Office Bearer’s Insurance is not compulsory, at The Strata Agency we strongly recommend Executive Members take out the insurance for their own protection.

Joseph Sharbeen from The Honan Group, advises that although the strata committee may be covered under the Public Liability Section of the strata policy, there is always a gap in what one could perceive to be an act of negligence against one individual officer or the committee collectively, which is paraded outside the scope of the normal public liability cover.

“With the litigation processes getting out of hand, it’s important for the persons taking up positions, to be protected in case legal action is taken against them collectively or individually,” said Joseph.

“The legal action could allege a negligent act that may result in financial loss or property damage. Such an action could be taken by other owners of the strata building alleging mismanagement and any third party whether residing or otherwise on the premises.”

Under the Honan Strata Policy, Office Bearer’s Insurance provides protection against legal action against the committee. Their policy covers loss for which they grant indemnification for, as permitted or allowed by law arising from any claim first made against you (as a committee member) or against the committee members collectively. The incident must be reported to Honan during the policy year or within 30 days thereafter. The amount indemnified will be the maximum amount noted under the limit projected under the schedule.

When selecting an appropriate policy for your situation it’s important to know what’s excluded. Common exclusions include claims arising from circumstances which were known to you prior to the inception of the office bearers policy, any dishonest or fraudulent act, criminal act or malicious act or omissions of the member(s) of the Executive Committee and claims resulting from your intentional decision not to effect and maintain insurances as required by the strata act amongst others.

For more information on Office Bearer’s Insurance, contact your Strata Manager.