If you're a director of a residents' management company (RMC), you're probably a leaseholder who agreed to help run the block. You're likely unpaid and you probably have a day job. You're still a company director, with the same core legal duties as the director of any other company. On top of that you're making decisions about other people's homes and money and, in some buildings, safety. RMC directors' and officers' (D&O) insurance is the policy that protects you personally when a leaseholder, a contractor, a regulator, or the company itself says you got one of those decisions wrong.
This guide is about D&O for RMCs in England and Wales, with a section on right to manage (RTM) companies. It covers what the law expects of RMC directors, which decisions tend to lead to claims, what D&O pays for and what it doesn't, and how it fits alongside the block's buildings policy. If you want to know how D&O works for companies in general, read Directors and Officers Insurance UK. If you need the buildings policy for the block itself, read Block of Flats Insurance UK. This page is about the people on the RMC board.
Mesh'd Limited trading as Meshed is authorised and regulated by the Financial Conduct Authority under firm reference number 1033248. We place cover from the insurers on our panel and charge a flat 10% broker fee, disclosed up front, with no admin add-ons. We don't publish "from £X" prices, because RMC cover depends on the building, the number of units, the company's history, and what the lease says. Named customer quotes are off.
The short answer
An RMC director is a company director. The general duties in the Companies Act 2006 apply whether you're paid or not and whether the block has 4 flats or 400.
Claims usually come from inside the building. Leaseholders disputing service charges, major works, contractor choices, or how a problem was handled are the most common source of trouble. Contractors, former directors, and managing agents come next.
D&O pays defence costs and, where covered, damages for claims alleging a wrongful act by a director. Defence costs are often the bigger benefit. Many disputes never reach a judgment but still cost money to answer.
D&O isn't buildings insurance. Damage to the building, injuries in the common parts, and repair costs sit elsewhere, mainly with the buildings and property owners' liability cover.
The company can buy D&O for its directors. Companies Act 2006 section 233 allows it, even though most other ways of exempting directors from liability are void.
In higher-risk buildings, the Building Safety Act 2022 adds duties on the company as an accountable person and can create personal criminal exposure for directors in some circumstances. Insurance can help with legal costs but won't pay criminal fines.
Who this is for
Directors of an RMC that holds the freehold, or one that is a party to the leases with management obligations while someone else holds the freehold.
Directors of a right to manage company (see the RTM section below).
Directors of small resident-run companies in converted houses, where two or three flat owners share the freehold through a company.
Company secretaries and anyone else acting as an officer of the company.
Managing agents and leaseholders who want to understand what the board should be insured for.
Commonhold associations are similar but have their own regime. Ask us if that's your structure.
What the law asks of an RMC director
An RMC isn't a club or a residents' association with a bank account. It's a company, and its directors carry company law duties. Here's how the main legal frameworks touch the role and where insurance does or doesn't help.
Law | What it asks | Where RMC directors can go wrong | Can D&O help? |
|---|---|---|---|
Companies Act 2006, ss171–177 | General duties: act within powers, promote the success of the company, exercise independent judgment, use reasonable care, skill and diligence, avoid conflicts, not accept benefits from third parties, declare interests | Spending outside the articles or lease; favouring your own flat; appointing a contractor you have links to without declaring it | Yes, for defence costs and covered damages, subject to exclusions for dishonesty and personal profit |
Landlord and Tenant Act 1985, s20 | Consult leaseholders before qualifying works or long-term agreements above the thresholds | Skipping or botching consultation, so the company can't recover the full cost | Defence costs of disputes, yes. The unrecovered cost of the works itself, generally no |
Landlord and Tenant Act 1985, s27A | Tribunal can decide whether service charges are payable and reasonable | Charges challenged as unreasonable or not allowed by the lease | Often, for legal costs of defending directors' decisions, depending on the wording |
Landlord and Tenant Act 1987, s42 | Service charge contributions held on trust | Mixing funds, poor records, losses from funds | Possibly for allegations against directors; theft needs crime/fidelity cover |
Building Safety Act 2022, Part 4 | Accountable person duties in higher-risk buildings | Not registering, not assessing or managing building safety risks, ignoring a compliance notice | Legal defence costs possibly; criminal fines, no |
Regulatory Reform (Fire Safety) Order 2005 | Duties on the "responsible person" for common parts | No suitable fire risk assessment, actions not followed up | Defence costs possibly; fines, no |
UK GDPR | Handling leaseholders' personal data properly | Sharing arrears lists or contact details inappropriately | Some D&O wordings help with defence; cyber cover is better for data incidents |
A few points from the primary sources are worth spelling out.
The care standard is objective as a minimum. Section 174 of the Companies Act 2006 says a director must exercise reasonable care, skill and diligence. That means the care expected of a reasonably diligent person with the general knowledge, skill and experience that may reasonably be expected of someone doing that director's job, plus the director's own knowledge, skill and experience. Being a volunteer doesn't lower the bar below that minimum. A director who happens to be a surveyor or solicitor may be judged against a higher one.
The company can't simply promise you'll never be liable. Section 232 makes void any provision that exempts a director from liability for negligence, default, breach of duty or breach of trust in relation to the company, or that has the company indemnify the director against it, except as the Act allows. Section 233 allows the company to buy insurance. Section 234 allows a "qualifying third party indemnity", but that indemnity can't cover criminal fines, regulatory penalties, defence costs in criminal proceedings that end in conviction, or civil proceedings brought by the company itself where judgment goes against the director. That's why insurance matters. It can do things the company's own indemnity can't.
The court can relieve honest, reasonable directors. Section 1157 lets a court relieve an officer from liability for negligence, default, breach of duty or breach of trust, wholly or partly, if they acted honestly and reasonably and ought fairly to be excused. That helps, but you still have to get to court and argue it, and that costs money. D&O pays for that defence.
Five decisions that lead to claims
Most RMC disputes start with a decision the board made, or didn't make. These are the patterns we'd plan for (illustrative, not real cases).
1. Major works without proper consultation
The roof needs replacing. The board gets two quotes, picks one, and issues demands. A leaseholder points out that section 20 consultation wasn't followed. Under the Service Charges (Consultation Requirements) (England) Regulations 2003, consultation is required for qualifying works where any one tenant's contribution would be more than £250. For a qualifying long-term agreement (one lasting more than 12 months) the threshold is £100 per tenant in an accounting period. If consultation isn't done properly, the amount the company can recover from each leaseholder is capped at the threshold unless the tribunal grants dispensation under section 20ZA. Now there's a funding gap, and some leaseholders blame the directors.
2. The service charge budget that leaseholders say is unreasonable
Section 27A of the Landlord and Tenant Act 1985 lets a leaseholder or landlord apply to the tribunal to decide whether a service charge is payable, and if so how much and when. That includes insurance and management costs. Tribunal cases take board time and sometimes legal advice. A claim may also follow that a director acted outside their powers or in bad faith.
3. Appointing or sacking a managing agent
The board appoints an agent who turns out to be poor, or sacks one mid-contract. The agent may claim for breach of contract. Leaseholders may argue the board didn't take enough care in choosing. Decisions involving a director's friend or business contact raise section 175 and 177 questions about conflicts and declared interests.
4. A leak, a fire, or a safety problem handled badly
Water gets into a flat from the common parts, and the board takes months to act. The physical damage is a buildings insurance matter. But a leaseholder may also claim the directors breached their duties by delaying repairs, failing to claim on the buildings policy, or ignoring warnings. That second claim, about how the directors behaved, is D&O territory.
5. Disputes between directors and members
Board fall-outs happen. A director may be removed and then claim they were treated unfairly. Members may challenge a board decision or an AGM process. A former director may bring a claim, or the company (under a new board) may bring a claim against former directors. That last one matters because some D&O policies exclude claims brought by the company or other insureds, so check how your policy treats "insured versus insured" claims.
What RMC D&O typically covers
Wordings vary, so treat this as a checklist to compare policies against, not a promise of what any policy includes.
Defence costs for claims alleging a wrongful act by a director or officer, such as breach of duty, neglect, error, misstatement, or breach of trust.
Damages and settlements you're legally liable to pay, where insurable and not excluded.
Investigation and regulatory costs, such as legal representation when a regulator or authority investigates the company or its directors. This is relevant to building safety and fire safety enforcement.
Tribunal representation where a director's conduct is in issue, depending on the wording.
Former directors for decisions made while they were in office (look for run-off and "past directors" wording).
Company reimbursement (sometimes called Side B) where the company indemnifies a director and the policy then reimburses the company.
Entity cover (sometimes called Side C) for claims against the company itself. Some RMC packages include it for particular claims, others don't.
Some RMC policies are sold as part of a "management liability" or "residents' association" package that may also include:
Crime / fidelity for theft of service charge funds by a director, employee, or (sometimes) managing agent. This matters because those funds are held on trust under section 42 of the Landlord and Tenant Act 1987.
Legal expenses for disputes such as debt recovery against leaseholders in arrears, contract disputes, or employment matters.
Employment practices if the RMC employs a caretaker, cleaner, or concierge.
What it usually doesn't cover
Exclusion | Why it's there | Where the cover usually sits instead |
|---|---|---|
Bodily injury and property damage | D&O is for financial loss from decisions, not physical events | Buildings insurance and property owners' liability |
Cost of repairs or works | That's a capital cost, not a liability | Service charge, reserve fund, or the buildings policy if there's an insured event |
Criminal fines and penalties | Generally uninsurable as a matter of public policy | Nowhere. Compliance is the only protection |
Fraud, dishonesty, deliberate breach | Often excluded once established by a final judgment or admission | Nowhere for the dishonest director; innocent directors may still be covered |
Personal profit you weren't entitled to | Excluded on most wordings | Nowhere |
Known claims and circumstances before inception | Insurers don't cover what was known at the start | The previous policy, if it was notified in time |
Prior and pending litigation | Same reason | The previous policy |
Contractual liability | D&O isn't a guarantee of the company's contracts | The company itself |
Claims by the company or other insureds | Some wordings restrict "insured v insured" claims | Look for carve-backs for derivative claims and claims by former directors |
Pollution | Usually excluded or limited | Specialist cover if needed |
The prior knowledge exclusion is the one that catches new boards. If you know about a dispute with a leaseholder, a contractor, or the freeholder when you buy or renew, tell the insurer. Under section 3 of the Insurance Act 2015 you have a duty of fair presentation: you must disclose every material circumstance you know or ought to know, or enough to put the insurer on notice that it needs to ask more. Getting this wrong can lead to a claim being reduced or refused.
How D&O sits alongside the block's buildings policy
RMC boards often assume the buildings policy covers "everything to do with the block". It doesn't. Here's how common events tend to split.
Event | Buildings policy | Property owners' liability | D&O |
|---|---|---|---|
Fire damages the roof and three flats | Yes, for insured damage | No | No, unless directors are accused of mishandling it |
Visitor trips on a broken stair in the common parts | No | Yes | No |
Leaseholder says the board delayed repairs, causing extra loss | Damage itself, possibly | Possibly | Yes, for the allegation against directors |
Tribunal challenge to the service charge | No | No | Possibly, for directors' legal costs, depending on wording |
Contractor sues for unpaid invoices after a dispute | No | No | Possibly, if the claim alleges directors' wrongful acts |
Regulator investigates building safety compliance | No | No | Possibly, for legal representation; fines excluded |
Funds missing from the service charge account | No | No | Allegations against directors, possibly; the loss itself needs crime/fidelity |
The buildings policy covers the building and some liability for injury and damage. D&O covers the directors for the decisions they make. You usually need both, and in a block run by its leaseholders the RMC is often the policyholder for both. For the buildings side, including how insurance costs are passed on and what leaseholders can ask to see, see Block of Flats Insurance UK. If you're a leaseholder trying to work out what the block policy covers for your own flat, see Landlord Insurance for a Leasehold Flat.
Leaseholders also have rights to information about the building insurance. Under the Schedule to the Landlord and Tenant Act 1985 a tenant can ask for a written summary of the insurance cover. The Leasehold and Freehold Reform Act 2024 also contains provisions limiting the insurance costs landlords can charge and requiring information about insurance to be given to tenants. Those provisions are being brought in by regulations, so check what is in force for your building. Either way, being open with leaseholders about what the block's insurance costs and covers is good governance, and it heads off disputes before they become claims.
Building Safety Act 2022: the accountable person angle
If your block is a higher-risk building, the RMC's risk profile changes a lot. Under section 65 of the Building Safety Act 2022, for the occupied-building duties in Part 4 that means a building in England that is at least 18 metres high or has at least 7 storeys, and contains at least 2 residential units.
Who is the accountable person? Under section 72, an accountable person is someone who holds a legal estate in possession in any part of the common parts, or who doesn't but is under a relevant repairing obligation for the common parts. RMCs, RTM companies and commonhold associations can all be accountable persons. Section 73 makes the accountable person responsible for the structure and exterior the principal accountable person (PAP).
What the company has to do. The main duties include:
Registration. The building must be registered with the Building Safety Regulator. Under section 77 the PAP commits an offence if the building is occupied but not registered (there is a reasonable excuse defence).
Building assessment certificate. Under section 79, when the regulator directs it, the PAP must apply for a certificate within 28 days.
Assessing building safety risks. Section 83 requires accountable persons to assess building safety risks for their part of the building.
Managing them. Section 84 requires all reasonable steps to prevent a building safety risk materialising and to reduce the severity of any incident.
Safety case report. Section 85 requires the PAP to prepare and keep under review a safety case report.
Residents' engagement strategy. Section 91 requires a strategy for involving residents in building safety decisions.
Compliance notices. Under section 99 the regulator can issue compliance notices, and failing to comply is an offence. Under section 101, an accountable person commits an offence if, without reasonable excuse, it breaches a relevant requirement and that places people in or about the building at "critical risk", meaning a significant risk of death or serious injury arising from a building safety risk.
GOV.UK guidance is clear that accountable persons can't delegate their legal obligations. A managing agent can do the work, but the duty stays with the company.
Personal exposure for directors. Section 161 says that where an offence under Part 4 is committed by a company with the consent or connivance of a director, or is attributable to their neglect, the director commits the offence too. There's an important carve-out for resident-run companies. Under section 161(4), where an RMC, RTM company or similar company is an accountable person, and one or more (but not all) of its directors have been appointed for a building safety purpose and are paid, section 161's Part 4 officer liability doesn't apply to the unpaid directors. Section 111 provides the framework for these building safety directors of RMCs.
In plain terms: some boards of higher-risk buildings may choose to appoint a paid, suitably qualified building safety director. That can change the personal criminal exposure of the volunteer directors. Get legal advice on whether it's right for your building. It's a governance decision, not an insurance one, but tell your insurer if you make it.
Where insurance fits. No policy will pay a criminal fine. A D&O policy may pay legal costs for representation during a regulatory investigation or prosecution, often on condition that those costs are repaid if there's a conviction or a finding of deliberate wrongdoing. Check the wording on investigations, regulatory proceedings, and "health and safety" or "corporate manslaughter" defence costs extensions.
Not a higher-risk building? The Regulatory Reform (Fire Safety) Order 2005 still applies to the common parts. Under article 3, the "responsible person" for premises that aren't a workplace includes the person who has control of the premises in connection with carrying on a trade, business or other undertaking (for profit or not). In many blocks that's the RMC. A fire risk assessment and follow-up actions should be on the board's agenda whatever the height.
RTM companies: what's different
A right to manage company takes over management of a block without buying the freehold. Under section 73 of the Commonhold and Leasehold Reform Act 2002, an RTM company is a private company limited by guarantee whose articles state that its object is to acquire and exercise the right to manage the premises.
Once the right is acquired, section 96 transfers the landlord's management functions under the leases to the RTM company. The Act defines management functions as including services, repairs, maintenance, improvements, insurance and management. Functions relating to re-entry and forfeiture stay with the landlord.
For D&O purposes that means:
RTM directors are directors of a company with duties to the company. The same Companies Act duties apply.
They take on decisions with real money behind them. That includes placing insurance where the lease puts the obligation on the landlord, setting service charges, and running works.
The freeholder is a likely source of disputes. Arguments about handover, documents, uncollected service charges, or the freeholder's remaining rights can lead to claims or threats against the board.
Building safety. An RTM company can be an accountable person where it has the relevant repairing obligations.
We'll cover RTM company insurance more broadly in a separate guide. For the board's personal protection, everything on this page applies.
Small blocks and converted houses
Many RMCs are tiny: a Victorian house split into three flats, with the owners each holding a share in the freehold company. These boards often skip D&O because "we all know each other". Things to think about:
Disputes between neighbours are disputes between members. A fall-out about a roof repair or a noisy flat can become a claim against whoever was running the company.
One director often does everything. Insurance, accounts, Companies House filings, repairs. That's a lot of personal exposure for one person.
Section 20 still applies. The thresholds are per leaseholder. In a three-flat house, a big enough roof job can trigger consultation.
Sale of a flat. When a director sells and leaves the board, they still want cover for past decisions. Look for run-off cover for retired directors.
The company must actually exist and file. A dormant or struck-off company can't run the building properly. Keep Companies House filings up to date.
If the block includes commercial units, such as shops on the ground floor, the buildings and liability side needs more care. See Commercial Property Landlord Insurance UK. If the RMC employs anyone, employers' liability is generally compulsory and the regulations set a minimum of £5 million for any one occurrence. See Employers' Liability Insurance UK.
Who pays for RMC D&O?
The company buys the policy and it covers the directors. Section 233 of the Companies Act 2006 allows this. Whether the premium can be recovered through the service charge depends on the lease. Some leases have wide sweep-up clauses covering the costs of running the company, others don't. If in doubt, take advice and be open with leaseholders. A board that is properly protected tends to be better at attracting volunteers, which helps everyone in the building.
Renewal checklist for RMC boards
Before you buy or renew, gather:
The basics. Company name and number, number of units, building height and storeys, whether it's a higher-risk building and registered, and whether there are commercial units.
Who's on the board. Current and recent directors, any paid building safety director, and whether the managing agent acts as company secretary.
Finances. Annual service charge budget, reserve fund size, and who controls the bank accounts.
Disputes. Any tribunal applications, complaints, threatened claims, or arrears disputes, current or in the last few years.
Works. Planned or ongoing major works, and whether section 20 consultation has been done.
Safety. Latest fire risk assessment and status of actions, and for higher-risk buildings the safety case report and registration.
Other cover. Buildings policy, property owners' liability, EL if relevant, and any existing D&O, crime, or legal expenses cover, with renewal dates.
The limit. How much cover you need. Think about what a long dispute could cost to defend, not just the worst-case damages.
Then compare wordings on: definition of "insured person" (including former directors and the company secretary), investigation costs, tribunal costs, insured versus insured, prior knowledge, run-off for retiring directors, and crime/fidelity if it's packaged.
FAQs
Is D&O insurance compulsory for RMCs?
No law says an RMC must buy D&O. Some articles, leases or managing agent agreements expect it, and many volunteers won't join a board without it.
Does being unpaid protect me from personal liability?
Not under company law. The Companies Act duties apply to unpaid directors. In higher-risk buildings, section 161(4) of the Building Safety Act 2022 can remove Part 4 officer liability for unpaid directors where some, but not all, directors have been appointed for a building safety purpose and are paid. That's a narrow rule, not general immunity.
Isn't the block's buildings policy enough?
No. The buildings policy covers damage to the building and usually some liability for injury or damage. It doesn't cover claims that directors breached their duties or made wrongful decisions.
Will D&O pay if we didn't do section 20 consultation?
It may pay to defend directors against claims about the decision, depending on the wording. It won't usually make up the money the company can't recover from leaseholders. That's a financial consequence of the process, not an insured loss.
Can former directors be covered?
Many policies cover past directors for decisions made while they were on the board. If you're stepping down or selling your flat, ask about run-off.
We're a share-of-freehold company with three flats. Do we need this?
It's a judgment call. The risks are smaller, but so is the board, and disputes between neighbours can be expensive. Ask us to compare the cost of cover with the risk you're carrying.
Do you name insurers or publish prices?
No. We place cover with the insurers on our panel and give you terms once we understand the building and the board. We don't publish "from" prices because RMC risks vary too much.
Talk to us
If your RMC or RTM board wants to check its D&O, its buildings cover, or how the two fit together, speak to us. Send the building details, your current schedules, and a note of any disputes, and we'll tell you what the insurers on our panel will need.
This page is general information, not legal advice. For questions about your lease, service charges, or building safety duties, take advice from a solicitor or a specialist adviser. GOV.UK points leaseholders to the Leasehold Advisory Service (LEASE) for advice.
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Vincent Liu
Co-founder & CTO
