B arry Davis and Shirley Greer, insurance executives who specialise in charities not-for- profit organisations, social enterprises, community interest companies and care organisations look at some of the top insurance tips for charity trustees. Why does my charity need insurance cover? All charities trustees have a duty to take out insurance to protect the assets and resources of their charity. No matter what your charity or not-for-profit organisation does, it will encounter a number of risks associates with loss, damage or liability arising from the risks it faces through its activities. To start with the basics: a charity may need buildings, contents and events insurance to cover their property against loss or damage. Charities needing insurance to cover against third party liabilities will require public indemnity, and may need professional liability insurance. If your charity employs any staff you are required by law to buy employers’ liability insurance, and even if a charity operates with only volunteers, they will still have the same duty of care to protect them.
Who can tell me where to get insurance?
The government’s official advice (Publication CC49 Charities and Insurance) is: “When trustees are thinking about taking out any type of insurance cover, they should carefully consider taking proper independent professional advice if they do not have the expertise themselves. It is usually best to use an insurance broker who has an understanding of charities’ insurance needs and who is in a position to place business with any one or more of a range of insurance companies.” My charity already has a finance officer – surely it’s up to them to sort all this out? Our advice is that it is the responsibility of all the trustees to work together to make sure the charity is run properly. This includes getting the right insurance from a broker who will take the time to listen and understand what you do. Charity insurance is not a ‘one size fits all’ any more than what your charitable organisation does being the same as all the others. For example, if you have a charity dealing with vulnerable children and adults, you need to ensure that the risk of abuse is specified in the policy, under what basis it is insured and the conditions they are subject to, for example, safeguarding policies and checks.
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be complex, and many charities we deal with require bespoke cover to look after their specific needs. Always make sure that you are dealing with an independent insurance professional who has experience of working with this sector, and who can look at the whole of the market to find a product to suit you. Scrutton Bland has been actively working within the third sector since 2007 to provide insurance, accounting and audit advice. To talk to Barry Davis call 01473 267007 email barry.davis@ scruttonbland.co.uk or to talk to Shirley Greer call 01206 838439 or email shirley.greer@scruttonbland. co.uk .
If I am a trustee, how can I protect myself from being responsible for legal claims if something goes wrong with the charity? Trustee indemnity (TI) insurance will cover trustees from personally paying legal claims that are made against them by their charity or a third party for a breach of trust, duty, or negligence. However it will not cover deliberate or reckless wrongdoing or give protection against insolvency. TI premiums can be paid by the trustees, or by the charity if it is authorised by the charity’s constitution. All charity trustees can be investigated by the charity commission in the case of a breach of trust, and there are a limited number of specific circumstances where a trustee could be found criminally liable. It is also worth saying that TI is important to have when recruiting new trustees, as giving them this protection provides both personal reassurance, and also ensures your charity is presented as responsible and professional. What other areas do trustees need to look at for charity insurance? As well as trustee liability, some of the other key areas you might need to consider are: professional Indemnity, loss of income, public liability, cyber insurance, PR crisis management, legal expenses, buildings, contents and stock. Charity insurance can
I am thinking of becoming a trustee, but I am concerned about what I will be personally liable for. Becoming a charity trustee is like becoming a company director – it is both exciting opportunity and daunting! Before you sign up, check what legal form your charity takes, as that will determine your liabilities. If a charity is incorporated, it will have a ‘legal personality’ which means in most circumstances, it is the charity itself which is responsible for its debt or other liabilities, and the trustees are usually protected from personal liability. If a charity is unincorporated then it is the trustees themselves who enter into legal relationships with third parties, and it is possible they will be exposed to personal liability if for example the charity runs out of funds. You should always ask for clear and reliable financial information to indicate the solvency of the charity,
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