Strata office bearers liability cover exists because committee members make decisions about other people’s buildings and money, usually for no pay, and can still be accused of getting those decisions wrong. It sits alongside the building and public liability sections of a strata insurance policy. Together with fidelity cover and voluntary workers cover, it is how a scheme protects the people who volunteer to run it.
The names change by state. The body may be an owners corporation, body corporate or strata company, and the elected group may be a strata committee, committee, executive committee or council. We use “owners corporation” and “committee” here. The legislation governing committees also varies by state and changes over time, so check the current requirements that apply to your scheme.
Why Committee Members Carry Personal Exposure
Committee members act for all owners. Their decisions affect repairs, levies, contracts, disputes and the insurance itself. When an owner, a tenant, a contractor or the owners corporation believes a decision caused them loss, the claim can name the individuals who made it.
Typical allegations include:
- failing to carry out repairs to common property, leading to further damage inside a lot;
- approving a contract or a contractor that turned out to be unsuitable;
- mishandling a by-law dispute or an owner’s renovation application;
- errors in handling levies, arrears or recovery action;
- allowing insurance to lapse, or leaving the building underinsured;
- statements in minutes or correspondence that an owner says damaged their reputation.
Committee members sometimes assume the legislation protects them for decisions made in good faith. Whether it does, and how far, varies by state. Even where some protection exists, it does not stop a claim being brought, and it does not pay for defending one.
What Strata Office Bearers Liability Can Respond To
Office bearers’ liability, sometimes called committee members’ liability, typically responds to claims alleging a wrongful act by a committee member or officer acting in that role: an error, omission, misstatement, breach of duty or neglect. Depending on the wording, it may pay:
- legal costs to defend the claim, which can exceed any damages;
- damages or settlements the committee member becomes legally liable to pay;
- costs of representation at certain inquiries or tribunal hearings, where the wording extends to them.
Who counts as an insured matters. Check whether the definition includes current and past committee members, the chair, secretary and treasurer, and whether it extends to the strata manager or building manager. In some wordings it does not, because managers are expected to carry their own professional cover.
Exclusions vary, but these are frequently found:
- Dishonest, fraudulent or criminal acts by the person seeking cover.
- Bodily injury and property damage, which belong under the public liability section.
- Claims or circumstances known before the policy started.
- Fines and penalties, where the law or the wording prevents them being insured.
- Claims brought by the owners corporation against its own committee members, which some wordings limit.
- Decisions made outside the committee’s authority.
Limits are chosen per claim, in the aggregate or both. Schemes dealing with larger buildings, significant remediation work or active disputes usually look at a higher limit.
Fidelity Cover for Scheme Funds
Strata schemes hold real money: administrative and capital works funds, levy receipts, and insurance proceeds waiting to be spent on repairs. Fidelity cover responds to loss of those funds through fraud or dishonesty, such as a committee member or other person with access to the accounts diverting money.
Points to check in the fidelity section:
- Whose dishonesty it responds to. Committee members and office bearers, and whether it extends to a strata managing agent or their staff. Managing agents may hold their own fidelity arrangements, depending on their state and licensing, and a scheme’s fidelity cover may exclude them. Ask how your wording treats the manager.
- The limit. It should reflect the money the scheme holds at its peak, which is often just after levies fall due or when a capital works fund has built up for a major project.
- Discovery and notification. Fraud is often found long after it began. Check how the policy treats losses that ran over several policy periods, and how quickly a discovered loss must be reported.
- Controls. Insurers take comfort from two signatories on payments, regular reconciliations reported to the committee, and audits of the accounts where the scheme requires or chooses them. Check the current requirements in your state.
Voluntary Workers
Owners often do jobs around the scheme themselves: gardening, clearing gutters, painting a fence, organising a working bee. Volunteers are not employees in the usual sense, and how workers compensation treats them varies by state.
Voluntary workers cover, commonly offered as a section of strata policies, can pay set benefits for death, permanent disablement and weekly loss of income for volunteers injured while working for the owners corporation. Benefits, waiting periods and age limits vary by policy. It is not a liability cover. If a volunteer’s work injures someone else or damages property, that is a public liability question.
Before a working bee involving ladders, roofs, power tools or chemicals, ask whether the job should go to a licensed contractor instead. The committee that organised the working bee is the one that will be asked about it afterwards.
Commercial and Mixed-Use Schemes
Committees of commercial and mixed-use schemes face extra exposures: disputes with commercial lot owners over outgoings and access, leasing of common property, larger contracts and complex building services. Office bearers’ and fidelity limits need to reflect that. See our page on commercial strata insurance and our comparison of residential and commercial strata insurance.
Practical Steps for Committees
- Read the office bearers, fidelity and voluntary workers sections of the current policy, not only the building sum insured.
- Confirm who is defined as an insured, including past committee members.
- Set the fidelity limit against peak fund balances, not average ones.
- Keep minutes that record the reasons for decisions, particularly on repairs, contractors and disputes.
- Notify the insurer promptly of any threatened claim, even an informal one. Late notification can prejudice cover.
- Record who holds signing authority, and review it whenever the committee changes.
These sections also affect what the scheme pays each year; our guide to strata insurance premiums explains how. If a claim does arise, our article on the strata insurance claims process sets out who lodges and how excesses work, and our strata insurance page covers the policy as a whole.
Common Questions
Can a committee member be sued personally?
A claim can name individual committee members. Whether it succeeds depends on the facts and the law in your state. Office bearers’ liability can pay defence costs and damages, subject to the wording.
Will fidelity cover protect us if the strata manager takes funds?
Not always. Some wordings exclude managing agents, who may hold their own arrangements. Check your wording, and ask the manager what they hold.
Our owners do their own gardening. Do we need anything extra?
Check that the policy includes a voluntary workers section and that its benefits suit. Keep a simple record of working bees and who attended.
Talk It Through
Request a strata quote or call 1300 983 940 and we will review the office bearers, fidelity and voluntary workers sections with your committee.
General advice only. This article does not take your objectives, financial situation or needs into account. Consider the relevant PDS and Target Market Determination before deciding on a policy.