Do Charities need insurance?
By law, charity trustees have a duty to protect their charity’s resources and assets. This can include insurance against certain risks such as loss, damage or liability arising from the charity’s day to day activities.
Are there any compulsory insurances?
Yes. If you employ staff then you are required by law to have employers’ liability insurance, and charities can be penalised if they fail to put appropriate cover in place with a hefty fine of £2,500 for every day the charity remains uninsured.
Similarly if the charity owns or operates motor vehicles then the charity will be required to buy motor insurance.
But we don’t have employees, we just have volunteers?
In the eyes of insurance legislation, volunteers are deemed to be employees and therefore employers’ liability insurance will also need to be in place irrespective of whether you have employees or just use volunteers.
Do we need insurance whilst visiting external events?
Although public liability insurance is not a legal requirement, it could still be a requirement of external venues i.e. at fetes, exhibitions etc. Therefore charities should carefully check their risk assessments or any other paperwork when planning to attend an external event. We would always recommend public liability insurance is put in place for any charitable body or social organisation that interacts with the public to avoid ambiguity and protect against legal costs and expenses in defence of alleged injuries to members of the public and third party property damage claims.
It also covers damages and compensation awards against the charity. When purchasing public liability insurance you need to ensure that the policy covers all your charity’s activities, including any fundraising events you may be organising.
Our charity provides a free service - do we still need professional indemnity insurance?
If your charity is providing any professional service (e.g. counselling) or provides advice then it can be held liable if any omissions or errors have been made or the charity are considered to have acted negligently which results in injury, loss, damage to a third party. These losses can be physical, mental or financial. Professional indemnity covers you for legal costs in defence of alleged claims of providing incorrect advice or negligent services. It would also cover damages and compensation awarded against the charity.
Contents Insurance - the main covers to consider
When insuring the contents of a building, trustees need to verify that their policy sufficiently protects the charity’s property, and Charities should consider whether:
- The policy covers the contents against theft
- If so, does the theft cover impose any specific security requirement ie multipoint locking systems, and if so, do the charity’s premises adhere to these?
- Does the policy extend to include accidental damage?
- Is the cover on a new-for-old basis?
- Is there any equipment that you regularly take away from the premises? If so, is there appropriate cover in place for this?
- Do you hold money on site? If so, do you have appropriate money covers?
Additional Covers a Charity should consider:
Trustees & Management Liability Insurance
This covers the directors, managers, officers and trustees personally for legal claims made against them for a breach of trust, duty or negligence committed by them in their capacity as a trustee. These claims could come from third parties or the charity. Without this insurance protection these legal costs would be payable personally by the trustee or person accused.
This policy also provides an extension to cover the legal entity of the charity against similar claims made such as corporate manslaughter, breach of contract and Health & Safety Executive investigations. The policy covers the legal costs and expenses in defending the charity.
This can protect the charity against loss of money or goods in the event of fraudulent acts of volunteers and employees.
Commercial Legal Expenses Insurance
This policy covers your legal defence costs connected to a variety of disputes including employment, health and safety and contract disputes. It also provides you with both an online and telephone advice service that can give you practical guidance on human resource and health and safety compliance.
Business Interruption/Loss of Revenue
This can cover the reduction in a charity’s income in the event of an insured event such as fire or theft. When considering this type of insurance it is important to seek professional insurance advice as an insurer’s definition of gross profit differs from that of an accountants.
How to decide what optional insurances your charity should consider?
Mitchell Charlesworth Insurance Solutions can arrange to review your charity’s insurance needs and ensure you’re appropriately insured. We can help you work through a charity risk assessment to determine what type of insurance cover is necessary for your particular charity. To discuss your insurance needs and what optional policies you would like to consider, please contact a member of the team who would be happy to arrange a free consultation meeting.
Please contact our Insurance Team, Richard Gorst or Carrie Arnold on 0151 423 7500.