Insurance and the managing agent

Managing agents provide an important professional service. Aside from being the custodians of significant amounts of money, they also manage and advise on the management of property assets.

Errors and omissions are an unfortunate possibility in every professional’s life as nobody is exempt from human error. Sometimes these errors or omissions can cause financial loss to clients and for this reason professional indemnity cover is a necessity.

PIMA (Professional indemnity for Managing Agents) is a professional indemnity product specifically designed for managing agents in South Africa.

Besides professional indemnity, managing agents need to consider a few other risks to which they may be more exposed.

Computer Crime and Cyber Liability are important areas of cover that should be considered.  Managing agents are often appointed by the community schemes to control, manage and administer common areas. It is the extent to which they carry out these tasks or even supervise that could affect the risks or liability. The managing agent’s insurance advisor should be consulted to discuss the extent of the managing agent’s liability cover needs and to ensure they have cover extending to properties under their management.

If a managing agent is employing staff on behalf of community schemes, it may also be prudent to consider Employment Practices Liability cover. This policy covers an employers’ legal expenses and any awards against it by the CCMA, Bargaining Councils and Labour Court for unfair labour practices such as unfair dismissal, etc.

Managing agents who are not authorized intermediaries themselves, should take care that they are not acting as or providing any intermediary services. NAMA (National Association of Managing Agents) have been warned about the possibility of hefty fines or jail sentences against managing agents by the Financial Services Board in this regard. Great care should be taken when drafting the managing agent’s agreement with client schemes in this regard.

 

Author: Mike Addison, Addsure

Contact Addsure – The Leaders in Sectional Title Insurance – for fit and proper advice from advisors who understand Sectional Title. Contact us in Johannesburg (011) 704-3858; Durban (031) 459-1795; Cape Town (021) 551-5069