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Leaseholders and residents
Most residents’ associations need public liability and committee or management liability (D&O) cover more than they need professional indemnity insurance. PI matters when the association, or a company it runs, manages a building, handles service charge money, appoints contractors or gives advice that people rely on. Resident management companies and right to manage companies usually do all four, so their exposure looks more like a managing agent’s than a social committee’s.
Part of: Professional indemnity for consultants
In short
A residents’ or tenants’ association that campaigns, meets and runs events mainly needs public liability and committee liability. A recognised tenants’ association under section 29 of the Landlord and Tenant Act 1985 is consulted on major works and can nominate contractors, but does not manage the building. Resident management and RTM companies do: an RTM company takes over the landlord’s management functions, including repairs and insurance. That brings PI exposure through section 20 consultation, service charges held on trust and contractor appointments, alongside D&O for directors. In higher-risk buildings in England such a company can be an accountable person. No law requires any of them to hold PI.
Last reviewed 5 October 2026 by the Apex professional indemnity team.
Start with what your organisation does, not what it is called. Your constitution, articles and leases decide the detail.
| Type of body | What it typically does | Cover to look at first |
|---|---|---|
| Residents’ or tenants’ association, including a recognised tenants’ association | Represents residents, holds meetings, publishes newsletters, runs events and responds to consultations on works and charges | Public liability for events and activities, and committee liability (D&O) for decisions. PI only if it advises members, handles money for others or arranges contractors |
| Resident management company (RMC) | Manages the building under the leases, typically with the leaseholders as members: collects service charges, holds reserves, appoints a managing agent and contractors | Directors’ and officers’ liability, public liability for the common parts, PI for management decisions, and cover for theft of funds |
| Right to manage (RTM) company | Takes over the landlord’s management functions under the Commonhold and Leasehold Reform Act 2002 | As for an RMC, with PI reflecting that the company now runs services, repairs, maintenance, insurance and management |
Committee liability and D&O protect the people who run the organisation against claims about their decisions. Public liability covers injury and damage, such as a fall at a summer event or in a corridor the company looks after. Professional indemnity covers claims that the organisation managed or advised negligently and caused a financial loss.
PI becomes relevant once the association, or the company behind it, does any of four things:
An association that does none of these has little PI exposure, and its budget is better spent on public liability and committee cover. An RMC or RTM company that does all of them should treat PI as core insurance alongside D&O. The two overlap: a botched consultation can produce a claim against the company and another against the directors who ran it, so arrange both and make sure they fit together.
The examples are illustrative, not real claims or outcomes. Each names who lost money and what they allege.
None of these is an accident of the kind public liability covers. The first four are management failures; the fifth is negligent advice.
These provisions, most of which apply in England and Wales, shape when claims arise and how large they get.
| Provision | What it says | Why it matters |
|---|---|---|
| Landlord and Tenant Act 1985, s.29 | An association of qualifying tenants (those contributing to the same costs through service charges), recognised by the landlord’s written notice or, in England, a First-tier Tribunal certificate. A landlord can withdraw recognition on at least six months’ notice. | Recognition gives a formal role in service charge matters, not management. |
| Landlord and Tenant Act 1985, s.20 | Tenants’ contributions to qualifying works and long-term agreements are limited unless the consultation requirements are complied with or dispensed with by the tribunal. | A skipped step becomes a funding gap. |
| Service Charges (Consultation Requirements) (England) Regulations 2003 | In England the limit bites where a tenant’s contribution to qualifying works would exceed £250, or to a long-term agreement £100 in an accounting period. Notices go to each tenant and any recognised tenants’ association, which may nominate a contractor, and observations can be made within 30 days. | The process an RMC or RTM company must run. |
| Landlord and Tenant Act 1987, s.42 | Where tenants contribute to the same costs, service charges paid to the landlord or other person entitled to them under the leases are held on trust. | An RMC collecting service charges holds other people’s money. |
| Commonhold and Leasehold Reform Act 2002, ss.72, 73 and 96 | The right to manage applies to self-contained buildings or parts containing at least two flats held by qualifying tenants, who must hold at least two-thirds of the flats. An RTM company is a private company limited by guarantee, and the landlord’s management functions under the leases become its functions. | An RTM company steps into the landlord’s management role. |
| Leasehold and Freehold Reform Act 2024, ss.49 and 50 | Since 3 March 2025, the non-residential limit for right to manage claims is 50% of internal floor area (previously 25%), and an RTM company and its members are generally not liable for others’ costs of a claim notice, subject to the Act’s exceptions. | More mixed-use blocks qualify, and the cost risk of claiming has changed. |
| Building Safety Act 2022, ss.65, 72 and 83 | A higher-risk building is in England, at least 18 metres or seven storeys high, with at least two residential units. Whoever holds or must repair the common parts can be an accountable person, with a duty to assess building safety risks. | Regulatory duties sit alongside the company’s PI and D&O exposure. |
| Companies Act 2006, s.174 | A director must exercise reasonable care, skill and diligence. | The duty that D&O claims against RMC and RTM directors turn on. |
Six everyday decisions to get right:
| Usually covered by PI | Often excluded or limited | Needs a different policy |
|---|---|---|
| Negligent handling of section 20 consultation | The cost of the repairs or works themselves | Injury at events or in the common parts (public liability) |
| Negligent management of services, repairs and insurance arrangements | Dishonesty and theft by directors, volunteers or agents | Theft of service charge or reserve funds (fidelity or crime cover) |
| Careless appointment or supervision of contractors and managing agents | Fines and regulatory penalties | Claims against directors personally for their decisions (directors’ and officers’ liability) |
| Negligent advice to members, where the policy extends to it | Claims by the company’s own members, if the wording excludes them | Damage to the building itself (buildings insurance) |
| Defence costs for covered claims, including tribunal and court proceedings | Problems known about before the policy started | Staff the company employs (employers’ liability) |
The members’ exclusion deserves a close look. In an RMC the leaseholders are usually the members, and they are also the people most likely to claim, so a wording that excludes claims by members can remove most of the cover. Every policy differs, and cover always depends on the insurer’s acceptance and the policy terms.
No law requires residents’ associations, RMCs or RTM companies to hold PI, so the limit is a judgement. Base it on what the company’s decisions control: the annual service charge budget, the reserve fund and the value of major works planned over the next few years. A consultation failure on a large roof, lift or fire safety project can put a substantial sum in dispute.
PI is claims-made, so it responds to claims first made while the policy is live, not to the year the work happened. Leaseholders often challenge works or charges long after the event, typically when the bill arrives. Keep cover running when the board changes, and if the company stops managing, ask about run-off before cancelling. See RMC and RTM directors’ liability insurance and D&O for clubs, associations and committee members.
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Apex Insurance Brokers is an independent insurance broker based in Bristol, established in 2009 and authorised and regulated by the Financial Conduct Authority. We are not tied to one insurer: we work with over 30 markets, including Lloyd’s syndicates through wholesale brokers, and every client has a named broker who handles the placement, mid-term changes, certificates for clients and the renewal.
Not always. Most need public liability and committee or management liability first. PI matters when the association or its company manages a building, handles service charge money, appoints contractors or gives advice that residents rely on. Resident management companies and RTM companies usually do all of those, so they normally need it.
No law requires residents’ associations, resident management companies or RTM companies to hold PI. Check your leases and the company’s articles, which may say what insurance the company must arrange, and expect any managing agent or contractor you appoint to hold its own cover.
D&O usually covers claims against directors personally over how they ran the company, such as an alleged failure to exercise reasonable care, skill and diligence. PI usually covers claims against the company itself that its management or advice was negligent and caused financial loss. Resident management and RTM companies often need both.
It may, if the policy covers the company’s management activities and the failure was negligent. In England, without consultation or tribunal dispensation, each leaseholder’s contribution to qualifying works is capped at £250. PI does not pay for the works themselves, but it can respond to resulting claims, subject to the policy terms.
An association of qualifying tenants, meaning tenants who pay service charges towards the same costs, recognised by written notice from the landlord or, in England, by a First-tier Tribunal certificate. It must be sent notices about major works and can nominate contractors, but it does not manage the building.
Usually. Once it acquires the right to manage, the landlord’s management functions under the leases, covering services, repairs, maintenance, improvements, insurance and management, become the company’s. Mistakes in carrying them out can cost leaseholders money, so PI belongs alongside the directors’ D&O cover.
Apex arranges professional indemnity insurance for residents' associations across the UK. Tell us about your work and we’ll find cover that fits. Or call 0117 325 0027.
Start your PI proposal Call 0117 325 0027Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority. Registered in England and Wales, company number 07014570. This page is general information, not advice on your individual circumstances. Cover is always subject to the insurer’s acceptance and the policy terms, and this page does not guarantee that cover will be available or on what terms.
