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Prescribed Rules and Indemnifying the Trustees

Present Prescribed Management Rule 12.(1)(a) states:  Subject to the provisions of sub-rule (2), every trustee, agent or other officer or servant of the body corporate shall be indemnified by the body corporate against all costs, losses, expenses and claims which he may incur or become liable to by reason of any act done by him in the discharge of his duties, unless such costs, losses, expenses or claims are caused by the mala fide or grossly negligent act or omission of such person.

(b) It shall be the duty of the trustees to pay such indemnity out of the funds of the body corporate.

(2) The indemnity referred to in sub-rule (1) shall not apply in favour of any managing agent appointed in terms of rule 46.

Reading this, our understanding is as follows:

  • The body corporate protects the trustees against all costs, losses, expenses and claims while acquitting their duties in their capacity as trustees unless grossly negligent.
  • Trustee indemnity insurance, over and above liability cover, can be purchased. This cover will cover costs in respect of errors and omissions unless the event, occurrence or circumstances are excluded in terms of the policy wording.
  • If no insurance is taken out specifically for this purpose or does not cover the trustees to the extent of the loss, the body corporate itself covers the loss, expense or claim. In layman’s terms, unless the insurance provides cover, the owners collectively cover the costs of trustee errors and omissions.
  • Trustees Liability cover is usually an extension of Public Liability cover. With the standard wider cover offered by most of the underwriting managers or insurers dealing with sectional title insurances, this extension is automatically included, or included as a separate section of the policy.


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