After a major flood in the common area of Strata Plan EPS5678 in Surrey, the strata council decided to use a contractor, 'RapidFix Renovations,' recommended by one of the council members without conducting proper due diligence or obtaining multiple bids. The work was completed poorly, leading to further damage and costing the strata an additional $50,000 to correct. Which type of insurance would primarily cover the strata corporation and its council members for potential claims arising from such a decision?

Question: After a major flood in the common area of Strata Plan EPS5678 in Surrey, the strata council decided to use a contractor, 'RapidFix Renovations,' recommended by one of the council members without conducting proper due diligence or obtaining multiple bids. The work was completed poorly, leading to further damage and costing the strata an additional $50,000 to correct. Which type of insurance would primarily cover the strata corporation and its council members for potential claims arising from such a decision?

Answer options:

• Liability insurance for common property damage.
• Errors and Omissions (E&O) insurance. ✅ Directors' and Officers' (D&O) liability insurance.
• Professional indemnity insurance.

Correct answer: Directors' and Officers' (D&O) liability insurance.

Explanation: Directors' and Officers' (D&O) liability insurance protects strata council members from claims of wrongful acts or neglect in their management duties, which could include making poor decisions regarding contractors. Section 150 of the Strata Property Act requires strata corporations to obtain this coverage for their council members.