Quick answer: A trustee may face complaints or possible liability concerns if decisions are careless, outside authority or poorly documented. From an insurance perspective, trustees should pay close attention to building sums insured, claims handling, maintenance records, fidelity cover, trustee indemnity and clear AGM or trustee resolutions.
What trustee liability means in practice
Trustees are expected to act in the interests of the body corporate and follow proper decision-making processes. Good records help show that trustees acted reasonably.
- Keep minutes of insurance decisions
- Record renewal comparisons and recommendations
- Avoid making promises about claims before policy wording is checked
- Escalate complex issues to suitable professionals
Insurance decisions that can create risk
Insurance is a high-risk area because an underinsured building, unclear excess or rejected claim can affect many owners.
- Not reviewing the building sum insured
- Ignoring valuation or renewal recommendations
- Failing to communicate major excess changes
- Delaying claims notification
- Poor handling of fidelity or trustee indemnity concerns
Fidelity cover and trustee indemnity
Fidelity cover and trustee indemnity are different types of protection. Trustees should understand both and check whether cover is adequate for the scheme.
- Fidelity cover relates to certain losses involving money or dishonesty
- Trustee indemnity relates to trustee decision-making risks
- Policy wording and exclusions still apply
- The renewal pack should be checked before AGM approval
How to reduce trustee insurance risk
Trustees can reduce risk by using a structured insurance review before renewal and ensuring owners are given clear information.
- Request a broker review before renewal
- Check claims history and excess changes
- Keep written records of decisions
- Update owners on important cover limitations
Need help reviewing the insurance position?
Lowensvlei Insurance Brokers assists body corporates, trustees and managing agents across the Western Cape with body corporate insurance reviews, sectional title claims support, renewal checks and practical communication with owners.
Lowensvlei Insurance Brokers assists body corporates, trustees and managing agents across the Western Cape with body corporate insurance reviews, sectional title claims support, renewal checks and practical communication with owners.