Section 71(1)(d) of BMSMA allows an MCST to purchase an Error and Omission (E&O) insurance policy to cover against any liability incurred by a person holding the office of chairperson, secretary, treasurer of an MCST or member of the council of the MCST because of an act or omission, committed or omitted in good faith, in performing the functions of that office. Section 71(3A) further requires such policy to be approved via an ordinary resolution at a general meeting.
An E&O insurance generally covers any council member or the council collectively against claims of inadequate work or negligent actions made during their tenure as council members.
While an E&O policy offers protection against negligence or omission, it does not protect any council member or the council for loss arising from any claim of unintentional defamation. Such coverage may only be provided via an Association Liability Insurance policy. While an MCST may resolve to purchase such liability insurance for its council members, the reality is there are just too few insurers willing to underwrite such coverage,possibily due high potential claims.
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