Do you know  what your  insurance policy cover?


Do you know  what your  insurance policy cover?

June 04, 2024

Do you know  what your  insurance policy cover?

The council of a management corporation (MCST) were very excited to organise a water carnival for their estate. A water carnival usually involved bringing inflatable floats into a swimming pool, turning it into a wonderland for children. There would be so much  fun and joy.  It was an event that everyone wanted it happened.💯

❓️A question popped up.

Any incident could occur at the common property. There might be a greater risk when an event were conducted at a swimming pool especially involving children.

“Our MCST has valid insurance policies!” the condo manager responded. 

A council member was quick to  ask: “Are we covered for this? Better check it out!”

To surprises, the insurer replied that the MCST would not be covered unless an extension of coverage were taken up!😱

There is no certainty that the liability of an MCST as an organiser for a social event is covered in the policy. Depending on the risk involved, some insurers viewed that the duty of an MCST is maintenance management of the common property, not an event organiser. That may also explain why there is a new Sect 38(3) in the amended Building Maintenance & Strata Management Act 2017 (BMSMA), requiring an MCST to seek a resolution for the use of management fund for social activities. 💯

An MCST is required under Sect 71  to effect an insurance in respect of damage to property, death or bodily injury occurring upon the common property for which the MCST could become liable in damages. This is usually provided via a Public Liability policy. A Public Liability policy would be invoked when negligence actually prefaced.

Insurance is a financial instrument that comes with legal and financial implications. The scope of coverage against risks must be as explicit as possible. The following  practices may be adopted:

✅️ Review the risk of the MCST regularly.

✅️ Inform  the insurer about any change in risk when the policy was  renewed or bought.

✅️Seek verification from the insurer, whenever in doubt.

✅️Never assume that everything is covered!

The Public Liability policy of  an MCST  does not cover a 3rd party (including Residents’ Network Committee)  organising a social event at the common property. Proper documentation  should be effected, requiring that 3rd party to carry the  necessary insurance policies and take  measures needed for the social event. 💯

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