Insurance can be a bit of a bore and the benefits are not immediately obvious: you spend money on the off-chance that something unfortunate will happen. Of course, it is precisely because we cannot predict the future that we need insurance. In addition to good sense, there are instances where insurance is required by law – third party cover for car drivers being an example. But what about charities and other not-for-profit organisations? What risks should they be insured against?
If you employ people you are required by law to have employer’s liability insurance (ELI). There are exemptions including family businesses, public bodies, and health service bodies - see www.hse.gov.uk for more details and definitions. ELI will meet the cost of compensation for employees who claim an accident, disease or injury was caused or made worse as a result of their employer’s negligence.
Public liability insurance, also known as third party insurance, protects an organisation against claims by members of the public for injury, loss or damage on the organisation’s premises. You may need to extend your policy in order to cover activities away from your premises that are attended by the public, such as fund-raising events. The Charity Commission warns that in some circumstances charity trustees may be personally liable for the cost of third party claims so, as ever, check your policy carefully.
Volunteers will not be covered by employer’s liability insurance unless they are explicitly mentioned in the policy so you must contact your insurance company to have your volunteers included. The same applies to public liability insurance. Before you recruit younger or older volunteers Volunteering England recommends checking with your insurance provider about upper and lower age limits for volunteers to make sure they will be covered by your policies.
Trustee indemnity insurance (TII) covers charity trustees against personal liability when legal claims are made against them. Be aware that TII cover may be limited or even ineffective unless certain conditions are met, and that some charities’ governing documents actually forbid the purchase of TII. See Charity Commission CSD-1279 information sheet for more information about what can be a complex subject.
Contents / buildings : if renting, check the terms of your lease to see what is covered
Fidelity insurance: covers loss arising from fraud or dishonesty within the organisation
Professional indemnity: provides cover for claims arising due to professional negligence, relevant only for organisations who provide a professional service, information or advice
Aside from compulsory insurance, the decision to purchase cover should result from an analysis of risk and judgement as to whether the cost of the premium is justified when weighed against the risk. Whilst financial considerations will be uppermost in this assessment there is also value in the peace of mind that may result from knowing you are insured. We may not know what is around the corner but we can try to reduce the impact those unforeseen events may have.
NB This information has no legal status and is provided as an overview, not a comprehensive guide nor a recommendation of any kind as insurance requirements depend on individual circumstances.