Charity Insurance - Including Trustee Indemnity & Public Liability

Charity Insurance - Including Trustee Indemnity & Public Liability Insurance For Small Charities & Non Profit Groups

Small Charity Insurance, Including Trustee Professional Indemnity & Public Liability

Insurance costs money, is too often overlooked and often isn't well understood by small charity and non profit groups.  Public liability insurance and trustee professional indemnity insurance are the best known, but not only insurance you should consider.  Being registered doesn't provide protection for all trustee liabilities and, if you're a trust or not a registered charity or other non profit, you don't have any limited liability protection at all.  This simple guide to charity insurance gives trustees what they need to protect yourself and your charity.

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Charity Public Liability Insurance

Charity public liability insurance isn't a legal requirement but is one of the most common types of insurance and it isn't just for fundraising events. It provides cover if you are sued for damaging someone’s property or injuring someone such as a volunteer, beneficiary or member of the public.

Personally, I see charity public liability insurance as a must have for most charities and I'd suggest including cover for legal costs. You may be required to have public liability insurance, if you have contracts with the public sector.

Charity Trustee Professional Indemnity Insurance

If you are in a charity trustee or a non profit director, you might consider taking out directors and officers (D&O) insurance, sometimes known as charity trustee liability or professional indemnity insurance. This covers you for claims resulting from mismanagement of the organisation and any associated legal costs.  See the below for why that might be important to you.

Charity Employers Liability Insurance

If you have paid staff, you're required to have a minimum of £5 million Employers' Liability insurance and it must be provided by an authorised insurance broker or company.  You can even be fined £1000 for not displaying your Employers Liability certificate.  Here's the Government's guidance.

Charity Vehicle And Minibus Insurance

The only other mandatory insurance is for vehicles and minibuses.  That may not apply to many and might seem screamingly obvious, but are you sure that any volunteer s who use their cars as part of their volunteering are adequately covered?   Volunteers using their own vehicle for volunteering work may not be covered by their regular insurance policy - they need to inform their insurer.

That aside, you have a legal duty of care, whether a vehicle is owned by your charity or not.  Basic checks should include at least, ensuring drivers have a valid licence for any class of vehicle (e.g., minibuses), a valid MOT and insurance.  Here's the RoSPA Volunteer Drivers Handbook.

Other Types Of Charity Insurance

Here are some other types of charity insurance you might need/want.

  • Buildings And Contents - obviously if you own your own but if you rent, check your lease in case it makes you responsible for anything that might require insurance.
  • Hirers - if you hire out your premises and don't require your hirers to have their own public liability insurance.
  • Business Interruption - in the event you have to close your premises - e.g., Covid, a fire or similar.  It sounds great, but as Covid showed can come with lots of 'get out' clauses and may now be very expensive.
  • Cyber - insurance covers the losses relating to damage to, or loss of information from, IT systems and networks.
  • Money - if your volunteers/staff handle money, take it to the bank or it's held overnight on your premises.

How To Choose A Charity Insurance Broker

Manage Risk & Compliance.  The first step is to ask yourself how confident you are that you have effective risk management and comply with the law. I've seen some very scary stuff in my time.  If you're not doing at least the basics well, it's  a lot more likely you'll have to make a claim.  That creates workload, you'll have to pay any excess, your insurance costs may well go up and, most importantly, someone may be hurt.  Equally, insurance policies come with specific requirements you must meet and, if you don't, any claim may be invalid.  Completing the Charity Excellence risk questionnaire takes 30 mins and costs you nothing.

Identify What You Need.  Identify what insurance you may need and the key risks  for you.  Use the sections above to do that and, if you don't have limited liability protection (see below) consider if you might need a higher level of cover.

Broker vs Insurance Company.  You can buy insurance directly from a price comparison site, but you'll be buying a standard package that may not meet your needs.  A broker is the middleman between you and the insurer and should help you to identify what you do and do not need.

Charity Sector Expertise.  Charities’ insurance needs differ to other organisations (e.g., volunteers), so using an insurance provider with sector experience can be helpful.  personally, I've always used a charity sector broker, because I think they provide a product that's better suited to a charity, and I don't think they cost any more.

Market Cover.  Some brokers may use only a small number of insurance companies, whereas others will search the whole market for you to get the best deal. Ask any potential broker about how they do this.

Claim Handling.  Sitting in a queue to a call centre for hours is an easy way to lose the will to live.  Having a nominated person that you speak to about your insurance  needs and who will manage any claim from start to finish can make life a great deal easier.

Clarity.  Can they answer your questions and are their fees clear and transparent?

Small Charity And Community Group Insurance Brokers

I have listed below some brokers that provide charity and community group insurance, with links to their web sites. These are in no particular order and there are others.

Charity Insurance - International Travel

I do not know and haven't used these insurance providers but they were recommended by charities on the SIDCN Facebook group.

I also found Innovation BrokingSalt Insurance Services and Edwards charity overseas travel insurance using an online search.

I'd very much welcome feedback from anyone who has used any of these insurance brokers.

Managing Your Insurance

Once you have your insurance cover, make sure to set a reminder to review it annually. The cover you need may change and the prices certainly will.

On a number of occasions, I've worked with charities who have simply paid their premium for years.  It took no more than a couple of calls to find out that either their cover, or level of cover was no longer appropriate and, usually, they were paying far too much for it as well.  If you haven't reviewed your insurance in the last 12 months, now might be a good time to do so?

Charity Trustee Liability

Normally, you will be incorporated if you are a registered charity or non profit registered with Companies House or the FCA, but not all are.  Incorporated non profits have limited liability protection.

However, be aware that charitable trusts are registered with the Charity Commission but are not incorporated.  Equally, if you are a small community group, charity or club that is not registered as a corporate body with a regulator, you are almost certainly not incorporated. That is extremely important, because the trustees, or those running the organisation, are likely to be personally liable for any claim that is made.  I would suggest that insurance is something you should consider very seriously, and I would (personally) not enter into any major contracts, such as a lease or employing staff, or undertake activities that may potentially carry any significant risks.

Charity Commission Insurance & Trustee Vicarious Liability

Here's the Charity Commission's guidance on insurance.  Here's the guidance on the vicarious liability of charity trustees. Essentially, how charity trustees can be liable for the actions of employees, volunteers and others who act for the charity.

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Charity Liability and Indemnity Insurance - FAQs

  • What is public liability insurance for charities?  Charity public liability insurance isn't a legal requirement but is one of the most common types of insurance and provides cover if you are sued for damaging someone’s property or injuring someone such as a volunteer, beneficiary or member of the public.
  • Is public liability insurance the same as professional indemnity?  Charity public liability insurance is intended for claims by members of the public for injury, illness or damage whilst professional indemnity insurance relates to claims by clients for professional mistakes or negligence.
  • What is the limit of indemnity in public liability?  The Limit of Indemnity (LOI) is the maximum an insurer will pay under your insurance policy. Any legal costs may be included within the Limit of Indemnity or may be covered as an additional amount, depending on your policy.
  • What is trustees' indemnity insurance? Trustee indemnity insurance, sometimes called trustee liability insurance, directly protects individual trustees, rather than the charity, personally having to pay legal claims made against them for any breach of trust or duty of negligence or care.
  • Do we need employers' liability insurance for our charity?  If you have paid employees, you are legally required to have employers’ liability insurance, which provides cover if you are held liable for staff illness or injury at work.
  • Do community groups need insurance? Given the small scale of community groups, most probably aren't legally required to have insurance. However, most are not incorporated, so those running them do not have limited liability protection and could potentially be liable, so insurance should always be considered.
  • What insurance do you need for a charity event? The most important insurance for a charity event is public liability, which covers claims that may be made against you by members of the public. However, there are other types of event insurance you may wish to consider, such as employers liability, for equipment or cancellation of your event.
  • Do I need insurance for volunteer drivers?  Some insurers cover volunteer driving within regular motor insurance policies while others may charge an extra premium or impose a higher excess for volunteer drivers.  Your drivers may, or may not, be covered by either the charity's or their own motor insurance policy.

These Resources Do Not Constitute Professional Insurance Advice

I have worked in the sector at senior level for many years and, for those who value these, I hold a number of professional qualifications, but I am not an accountant, lawyer nor an insurance expert and no advice can be applicable to all organisations, in all circumstances, so this resource does not constitute professional opinion.  Essentially, I've used my experience and Internet research to create a layman's guide. I hope you found it useful.

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