Did you know that a defect in a property your agency manages could put your business at risk?
Aon, EAC’s approved insurance provider, is seeing allegations of agency negligence as a result of ‘slip and fall’ claims in rental properties. If the claimant can prove a property manager failed to act after being told about a loose balcony balustrade for example, and it causes an accident, you could be deemed at fault.
A claim could even arise if your property manager fails to notice a defect during a regular property inspection – a loose stair tread or an electrical fault for example.
“In one tragic case, a toddler fell from a staircase and suffered a fractured skull,” explains Peter Lynch, Client Relationship Manager with Aon Risk Solutions.
“She developed serious complications and is unlikely to recover. During an inspection just two weeks prior, the property manager had noted an issue with the rear staircase – which was rectified. But the front staircase had the same design, with no balustrades below the handrail, and that was not fixed at the same time. The child fell from the front stairs.”
A negligence claim was brought against agency, on the basis that its property manager had failed to prevent a foreseeable risk of harm. Damages were awarded in excess of $600,000. Fortunately, the agency was covered by Aon’s Real Estate Professional Indemnity Insurance.
“This Professional Indemnity policy is designed specifically for real estate agents, and covers the five main areas of mismanagement exposure for property managers,” explains Peter:
- Mismanagement causing loss of rent and property damage/theft
- Mismanagement causing injury
- Fidelity for theft by employees
- Defamation in relation to tenants
- Discrimination to tenants on the basis of race, sex or religion.
Peter says the main area of exposure is bodily injury claims.
You can protect yourself from mismanagement claims by ensuring your regular property inspections are thorough and documented in writing, that you properly identify defects
and maintenance and repair items where they exist and arrange to have them fixed quickly and efficiently by appropriately qualified contractors.
It’s also important to keep landlords updated on these issues, and get their authorisation for any repairs quickly. And to be fully prepared for any unexpected events, fully document the whole process so you can prove your inspections and your systems and procedures are not at fault.
“The consequence of mismanagement claims extends beyond financial remuneration to the loss of good reputation in the community and damage to your real estate brand,” says Peter.
So make sure you have adequate Professional Indemnity Insurance, and confidence and certainty in your policy coverage. And empower your staff to provide sound duty of care.
EAC is proud to have Aon as our approved Insurance Partner. Aon have over 30 years’ experience in the real estate market and with a team of experts in NSW and across Australia it means that they bring our Members exceptional service and industry insight.