Directors’ & Officers’ Insurance for RMC and RTM Directors

If you sit on the board of a residents’ management company or right-to-manage company, you are a real company director with real legal duties — and the block’s buildings policy does nothing to protect you personally.

Volunteer directors, real duties

Residents’ management companies and right-to-manage companies are real companies, registered at Companies House, and the people on their boards are real directors in law. The fact that you volunteered, take no pay and only wanted the roof fixed changes nothing about that. Company directors owe the general duties that company law imposes on every director: to act within their powers, to promote the success of the company, to exercise independent judgement, to exercise reasonable care, skill and diligence, and to avoid conflicts of interest. Those duties are owed by the retired teacher chairing an RMC of a small converted house just as they are by the director of a listed company.

Directors of resident-run companies also file accounts and confirmations, sign contracts, hold and spend other people’s money through the service charge, and make decisions that directly affect the value of their neighbours’ homes. That is a lot of legal surface area for an unpaid role.

Where the disputes actually come from

Most claims against RMC and RTM directors grow out of ordinary building management, not exotic wrongdoing. The recurring sources are familiar to anyone who has sat through a contentious residents’ meeting:

• Service charges. Disputes over what was demanded, how it was calculated, how arrears were pursued, or how the reserve fund was spent. A leaseholder who feels overcharged may aim at the directors who set the budget, not just the company.
• Repairs decisions. Allegations that the board delayed necessary works and the building deteriorated, or conversely that it commissioned works that were excessive, premature or badly scoped.
• Contractor appointments. Claims that a contractor was chosen improperly, that consultation requirements were mishandled, or that a director had an undisclosed connection to the firm appointed.

Add the routine hazards of any small company — disputes between directors, allegations of acting beyond the company’s powers, complaints about how leaseholders’ personal information was handled — and the picture is clear. Even when an allegation is weak or plainly wrong, someone has to fund the defence, and without cover that someone can be the director personally.

What D&O insurance does

Directors’ & officers’ insurance protects the individuals, not the building. It typically pays the legal costs of defending claims and investigations brought against directors in their personal capacity, and pays compensation where they are found personally liable, subject to the policy terms. Claims can come from leaseholders, from the company itself, from third parties such as contractors, or from regulators. Good policies cover past, present and future directors of the company automatically, so cover doesn’t lapse for someone who has stepped off the board when a claim about their era later surfaces.

What D&O does not do is insure the building, the common parts or the company’s liability as occupier — that is the block policy’s job. The two are complementary, and a well-run block needs both.

Why the cost is modest relative to the exposure

We deliberately avoid quoting figures on this page, because they vary with the block and the market. But the qualitative point holds across the board: for a resident-run company, D&O cover is generally an inexpensive line on the service charge, while the exposure it addresses is personal. An uninsured director facing even an unfounded claim is funding lawyers from their own savings, with their own home ultimately behind any award. Set the cost of transferring that risk against the cost of carrying it personally, and the purchase tends to justify itself. It is also, bluntly, a recruitment tool: sensible people are reluctant to join a board that leaves them personally exposed, and blocks that struggle to fill their committees often find D&O cover is part of the answer.

How it sits alongside the block policy

The block’s buildings and liability policy protects the company’s property and its liability for injury or damage arising from the building. It does not respond when a director is personally accused of a bad decision, a breach of duty or a procedural failure. Some block policies offer a D&O section as an add-on; where that exists, check the limit, who is covered and what is excluded, because a bolt-on section can be thinner than a standalone policy. Either route can be right — what matters is that cover exists, the limit is adequate for the size and contentiousness of the block, and the board knows which policy it would turn to.

Practical points before you buy

• Disclose what’s brewing. Known disputes, threatened claims and ongoing disagreements should be disclosed when cover is arranged; a claim traced back to something known and unmentioned is where policies fail.
• Check who is covered. The policy should pick up all directors and officers, past and present, and ideally anyone who acts in a managerial capacity for the company.
• Think about departures. Directors leave and companies are sometimes wound up or hand back management; understand how the policy treats claims made after those changes.
• Keep minutes. D&O responds best when decisions are documented. A board that records what it decided and why is easier to defend.

How Apex helps

Apex Insurance Brokers is an independent, FCA-authorised broker (FRN 724952) based in Bristol. We arrange D&O cover for RMC and RTM boards on its own or alongside the block policy, and we’ll tell you plainly whether an existing add-on section is worth relying on. If your block policy is also due, we can look at the two together — see our guide to insuring a block of flats.

Frequently asked questions

I’m unpaid — surely I can’t be personally liable?

Being unpaid does not dilute directors’ duties. Volunteer directors of RMCs and RTM companies owe the same general duties as any other company director and can be personally pursued for alleged breaches.

Doesn’t the block’s insurance already protect us?

The block policy protects the building and the company’s liability as property owner. It does not defend directors accused personally over their decisions — that is what D&O cover is for.

Who buys the policy — the company or the directors?

The company normally buys it and the cost goes through the service charge like other insurance, but the people protected are the individual directors and officers.

Can a claim come from our own leaseholders?

Yes — leaseholders are the most common source. Service charge grievances, stalled repairs and contractor choices are exactly the disputes this cover exists for.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is a general guide, not advice on your own lease or policy; wordings differ, so always check your documents or ask us.