RMC & RTM Company Insurance: Block, Directors & Funds UK
A residents' management company (RMC) or right to manage (RTM) company takes on the legal duties of running a block of flats, and usually the duty to insure it. That means the company needs the block buildings insurance and property owners' liability, but also cover the building policy doesn't give: directors' and officers' liability for the volunteer leaseholders who act as directors, employers' liability if it employs a cleaner or caretaker, fidelity cover protecting service charge money, and legal expenses for disputes and tribunal cases. Under the Commonhold and Leasehold Reform Act 2002, the management functions an RTM company takes over include insurance. Miller & Partner arranges insurance programmes for RMCs, RTM companies and the blocks they manage, including blocks with claims history or past refusals.
Key facts at a glance
- RMC and RTM directors are usually unpaid leaseholders, but they can still be personally sued.
- Insurance is one of the management functions an RTM company takes over under the 2002 Act.
- The block policy doesn't protect the directors. Directors' and officers' cover does.
- Employers' liability is compulsory if the company employs staff such as a cleaner or caretaker.
- Service charge funds can be stolen or misused. Fidelity cover protects them.
- Leaseholders can challenge costs at tribunal, so legal expenses cover is worth having.
What is the difference between an RMC and an RTM company?
Both are normally limited companies with leaseholders as members and volunteer directors. Both take on duties set out in the leases, which almost always include insuring the building, collecting service charges and keeping the common parts in repair. The insurance needs are very similar; what differs is who owns the building and whose interests must be noted on the policy.
What insurance does an RMC or RTM company need?
| Cover | What it protects | Needed when |
|---|---|---|
| Block buildings | The structure and common parts at full rebuild cost | The leases require the company to insure |
| Property owners' liability | Injury or damage caused by the building or common parts | Always |
| Directors' & officers' | Directors personally, against claims for decisions they make | Always, for volunteer directors |
| Employers' liability | Claims by employees injured at work | The company employs anyone |
| Fidelity | Service charge and reserve funds against theft or fraud | The company or an agent holds funds |
| Legal expenses | Costs of disputes, debt recovery and tribunal cases | Service charge or lease disputes are possible |
| Engineering inspection | Statutory inspection of lifts, boilers and pressure systems | The block has lifts or communal plant |
See our guides to directors' and officers' insurance and engineering inspection insurance.
Can RMC or RTM directors be personally liable?
Common triggers include failing to arrange adequate insurance, delaying fire safety works, mishandling a major works consultation, or a leaseholder claiming the directors acted unfairly. Fire safety duties for residential buildings have tightened since the Building Safety Act 2022, which increases the exposure for those running blocks. Without cover, directors may have to fund their own defence.
Why do some RMC and RTM blocks struggle to get insurance?
- Claims history: see block of flats insurance after a claim.
- Cladding or EWS1 issues: see cladding and EWS1 buildings insurance.
- Commercial units in the building: see mixed-use block insurance.
- Short-let flats: see short lets in leasehold flats.
This is where the Insurability Framework™ helps: we present the building, the company and its controls together, so underwriters can price the block on evidence.
How does an RTM company take over the insurance?
- Check the leases and the existing policy. Note the renewal date and what the leases require the insuring party to cover.
- Plan for the acquisition date. Arrange cover in the RTM company's name to start on the day management transfers, with no gap.
- Note the freeholder's interest. The freeholder still owns the building, so their interest normally needs to be noted on the policy.
- Add the company covers. Directors' and officers', employers' liability if needed, fidelity and legal expenses.
- Get a current rebuild valuation. Inherited sums insured are often out of date.
Frequently asked questions
Usually, yes. The management functions an RTM company takes over under the Commonhold and Leasehold Reform Act 2002 include insurance. Where the leases require the landlord to insure, that duty normally passes to the RTM company.
Yes. Directors can be sued personally over decisions they make for the company, even when unpaid. Directors' and officers' insurance pays their defence costs and any damages.
No. The block policy covers the building and property owners' liability. Claims against directors for their decisions need a separate directors' and officers' policy.
Only if it employs someone, such as a cleaner, caretaker or gardener on its payroll. If it uses contractors or a managing agent's staff, check that they carry their own cover.
It protects service charge and reserve funds against theft or fraud by directors, employees or, depending on the wording, a managing agent. Large reserve funds make it worth having.
Leaseholders, through the service charge, as the leases allow. Directors' and officers' and other company covers are normally recoverable as a management cost, but check the lease wording.
Yes. A newly formed company has no insurance history of its own, but the building's claims record and condition are what insurers mainly assess. Start before the acquisition date so there is no gap.
Yes. Specialist markets write blocks with escape of water history, cladding concerns or past refusals when the facts and remedial plans are disclosed in full.
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