Risk & Insurance
Risk in the world of resident unit managers
Reasons for claims from resident unit managers, and the importance of risk management

There is always action in the real estate industry, and the life of a resident unit manager is no different. The one constant that does remain present is the risk of having a claim of negligence brought against you. Resident unit managers (RUM) generally have a lot on their plate, and while you might think nothing will happen to you because of how careful you are, the truth is, claims of negligence or for financial loss can occur to even the most cautious RUM.

Professional Indemnity Insurance is an important cover to hold to provide cover in such instances, but it’s not enough to simply hold insurance without having some adequate risk management procedures in place. Let’s take a look at some of the way claims under Professional Indemnity insurance policies can come about for RUM’s and what you can do to safeguard against the potential of having a claim brought against you.  

Top reason for claims

Claims from resident unit managers can come about due to several reasons, and a single claim can sometimes also have multiple reasons behind it. Most claims under Professional Indemnity will have an element of professional negligence, but there are also likely to be other issues at play which can lead to a claim.

One common cause of PI claims for RUMs is for property mismanagement, where owners allege that mismanagement by you has caused them a financial loss. Property mismanagement claims can also come about as a result of tenants alleging, they have suffered an injury due to poor maintenance or mismanagement by a RUM.

In these instances, while property mismanagement is the cause of the claim, the underlying issue may be considered to be negligent conduct if a RUM has not acted appropriately in not identifying and/or repairing damage. These types of claims can often escalate quickly, with defence costs and compensation easily running into the thousands of dollars.

Why it goes beyond insurance 

You probably hold Professional Indemnity Insurance to cover for claims which might come about because of some of the above events but adopting sound risk management principles to prevent claims in the first place is also important. For resident unit managers, basic due diligence in your work goes a long way in helping prevent claims under your PI insurance. This includes ensuring regular and thorough inspections are conducted, following up and completing repairs, and constantly keeping your eyes and ears open for initial signs of problems, be it a hazard which may lead to an injury, or a tenant who does not appear to be maintaining their unit in adequate condition. Keeping open lines of communication with the owners, as well as records of all communications is also important.

Being diligent in managing your risk can not only help prevent claims to start with but can also make a huge difference to the strength of your defence if a claim does come about. For example, one of the pillars of risk management is adequate record keeping. If you do find yourself the subject to an allegation of professional negligence, how well your legal team can defend your case will greatly depend on the strength of the records you’ve kept of interactions and transactions with the property owners and anyone else involved.

The information provided in this article is current as at the date of publication and subject to any qualifications expressed. Whilst Aon has taken care in the production of this article and the information contained has been obtained from sources that Aon believes to be reliable, Aon does not make any representation as to the accuracy of information received from third parties and is unable to accept liability for any loss incurred by anyone who relies on it. The information contained herein is intended to provide general insurance related information only. It is not intended to be comprehensive, nor should it under any circumstances, be construed as constituting legal or professional advice. You should seek independent legal or other professional advice before acting or relying on the content of this information. Aon will not be responsible for any loss, damage, cost, or expense you or anyone else incurs in reliance on or use of any information in this article.