Tips for Insurance
One of the most rewarding aspects of working in the management rights industry is helping people enjoy their hard-earned vacation or leisure time.
Every day, you’re dealing with the smiling faces of happy and contented customers. Along the way, the owners and landlords you represent are enjoying the security and convenience of knowing you’re on site, so they’re happy and contented too.
Until they aren’t.
Most of us are aware of the risks of liability – and the need to be systematic about checking safety responsibilities such as smoke alarms and pool fences – but there are even more risks when you are the one in the middle between both property owners and tenants or guests.
As a standalone business, operators can be subject to a range of liability and compensation claims that the body corporate’s existing insurance policies will not cover.
This can include anything from double booking of units and disputes with landlords over tenant selection or repairs, to breaches in regard to libel, trades practices or intellectual property infringements.
If one of your customers suffers a loss, or there’s an incident resulting in injury or damage, you could be held liable and a claim against you could cost thousands – not to mention the stress of a pending legal claim or the threat of having to pay big court costs if findings go against you.
That is why all management rights operators need to consider their insurance protection carefully and make sure they have the right kind of cover in place. Not all policies are created equal so it is important to look beyond the annual premium and to compare policies for quality – what items are included or excluded, the cost of excess, and so on.
What to cover
Management rights sounds like a straightforward business but, like any venture, it can quickly become complicated when things don’t go according to plan.
As the manager of a residential complex, you could be held responsible for the safety of all visitors to your site. If someone slips around the pool, falls down steps, or scrapes their car in the carpark, for example, they may have grounds to make a claim against you.
Case studies, experience and history demonstrate the importance of resident managers taking out specialised insurance that combines a carefully selected package of professional indemnity, broadform liability, loss of fee income or business interruption, and a multitude of other covers.
Understanding the policies
Management rights operators need both public liability, or broadform, and professional indemnity cover to adequately meet the insurance risks of their business. Broadform liability is designed to protect you and your business if someone successfully claims compensation for personal injury or property damage.
Professional indemnity is a little different and protects you if someone is successful in claiming compensation for the financial loss because of a breach of your professional duty – an act, error or omission made by you in the course of doing your job. Liability insurance will safeguard you from claims such as a guest who slips over on a wet floor or suffers an injury in a pool or spa, or damage done to a guest’s property, for example, a car dented by stones thrown up from a lawnmower.
There is also the potential for disputes with owners, for example, over guest selection or property repairs, claims against a manager who did not help resolve a dispute, systems or human error resulting in double bookings or mistakes with forward bookings and travel arrangements.
The threat of an impending claim and legal action can not only be expensive it can also be extremely stressful and take a big toll on your personal health and relationships.
And there are some important fine points that can catch the unwary so it is important to work with an experienced insurance broker who can give you independent professional advice. For example, Professional Indemnity will only cover claims made during the period covered by the active policy so don’t delay. You need to notify the insurer about an event as soon as it happens.
Loss of fee income and run-off cover
One aspect you need to consider is an insurance policy that covers loss of fees if your business is disrupted and you miss out on income or incur extra costs due to unforeseen circumstances such as damage to buildings, contents or the records you keep on behalf of your customers.
Your responsibility as a management rights operator does not end when you retire or close the business either and your liability exposure could continue for years.
If someone makes a claim against you and you don’t have a current professional indemnity policy – even if you did have cover at the time the incident originally occurred – you will have to meet the cost of fighting the claim from your own pocket.
This is where run-off insurance can give you long-term peace of mind. There is no rule for determining how long you should maintain run-off cover. Some suggest six years is sufficient as that is the legal time limit for claiming against breach of contract, suffering, damage or loss.
The legal complexities in this area are acute so it is important to look for expert advice before making any decision about insurance. The vital lesson is that latent liabilities may not surface for weeks, months or years after you leave the industry, so you need to keep safeguards in place. EBM automatically includes 12 months of complimentary run-off cover in its tailored, Management Rights policies.
Choosing expert advice
EBM has a specialist division to provide expert advice and assistance to management rights business owners. After 40 years in operation, we are one of Australia’s leading broking companies, with a proven reputation for quality client service and expert technical advice.
We understand that every business is different. Rather than off-the-shelf solutions, we tailor insurance portfolios to suit your specific situation. We draw on our established relationship with the world’s top insurers to find the coverage you need at the best possible price.
Our tailored management rights cover incorporates many features that may not be found in other policies, such as:
- Broad definition of personal injury and property damage
- $25,000 cover to defend statutory fines
- Body corporate breach notice defence costs – $30,000
- Cover for relief managers as an automatic inclusion
- Rekeying of lost locks and keys – $25,000
- Bodily injury due to professional services and advice on a “claims occurring” basis rather than “claims made”
- 12 months free run-off cover
And when it’s time to make a claim, we will represent your interests with insurers and help navigate the process on your behalf.
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