Just like a commercial enterprise, charities have a legal duty to protect their people, assets and resources. To do that, they must take out insurance policies that cover them against the specific risks they face. Charities come in all shapes and sizes, so the policies they need to protect them against potential loss, damage and liability arising from their day-to-day activities will differ.
In this guide, we’re going to take a look at the various insurance policies UK charities should consider, from compulsory covers to the optional policies that provide peace of mind.
Does your charity need insurance?
Yes. You are required by law to protect your charity’s people, assets and resources. It’s also a legal requirement to put specific cover in place if your charity:
- Employs staff or has volunteers
- Operates vehicles on public roads
There are also several other covers that, though not a legal requirement, still provide important protection against many of the other risks your charity may face.
Why do charities need insurance?
Just like businesses, charities carry numerous risks. The specific risks charities face will depend on the activities they’re involved in, how they’re run and who is involved. As described above, in some cases, you are required by law to have insurance cover to protect you against those risks. However, even when it’s not a legal requirement, it’s still strongly recommended to have cover to protect the charity’s money, reputation and property.
If you’re not sure what policies your charity needs and whether they fall into the must-have or nice-to-have bracket, it’s well worth making a call to one of the specialist charity insurance brokers here at Scrutton Bland. We will ask a few questions about your charity to get an accurate picture of your requirements.
We will want to know:
- Whether you rent, lease or own your premises
- How many employees and/or volunteers you have
- If you deal with third parties or members of the public
- If you have shops or retail premises
- Whether you run events, either regularly or occasionally
- The type of equipment you have, such as furniture, vehicles, computers & stock
- What employee or customer data you hold
- The sort of activities you provide for your service users and the general public
Once we have a good idea of the type of charity you run and the risks you face, we will take you through the different covers that are available to you.
What types of insurance do charities need?
- Employers’ liability insurance
If your charity has even just one paid employee, then it is a legal requirement to have at least £10 million of employers’ liability cover in place. Failure to do so could lead to a fine of up to £2,500 for every day that you are not insured.
Employers’ liability cover protects your charity from compensation claims resulting from an employee injury, illness or property damage in the workplace. This type of protection should be put in place for full-time, part-time staff and unpaid volunteers alike. Although voluntary work is done in good faith, many volunteers are subject to the same risks as employees and compensation claims for injuries, illness or property damage could still arise.
This type of cover is a legal necessity for all charities with employees, from homeless hostels and charities that work with vulnerable children and adults to new start charities, fundraising charities and more.
- Public liability insurance
Although it’s not a legal requirement, the government advises that charities that run fundraising events or occupy land or buildings should consider putting public liability insurance in place. You should also consider Public Liability insurance if you are involved with members of the public and vulnerable adults or children, a normal charity insurance policy will include abuse cover.
This cover protects your charity against the potential cost of compensation claims from members of the public who are injured, or whose personal property is damaged as a result of your activities. When purchasing public liability insurance, you must make sure that your policy provides cover for all of the activities and events you will be involved in.
Public liability insurance is an important consideration for any charitable body or social organisation that interacts with the public. Venues that you use for charitable events may also require that you have public liability insurance in place.
Public Liability can also extend to include treatment risk insurance in respect of administration of medicine, always consider this if you are involved with any medication on behalf of your service users
- Professional indemnity/trustee liability insurance
Although it’s not a legal requirement, professional indemnity insurance is another policy that some charities should consider very seriously. It provides cover for the costs of defending allegations of wrongdoing, providing improper advice or negligent services that result in loss, injury or damage to a third party. That loss can be physical or mental as well as financial.
A trustee liability insurance policy works in a similar way. It protects the trustees of a charity against the financial impact of legal claims for a breach of trust or duty and negligence in their capacity as a trustee. These claims could be made by third parties such as members of the public or the charity itself. Without a trustee liability insurance in place, the legal costs to defend such a claim would have to be paid personally by the trustee(s) involved.
If your charity provides any kind of advice or service to the public, such as counselling programmes or youth work sessions, a professional indemnity policy would provide peace of mind.
Other types of charity insurance
As well as these three key policies, there are other insurance policies that could provide vital cover for your charity, depending on what your charity does and who it works with.
Insurance cover for cyber liability has been available for over ten years but is now widely accepted as a ‘must have’ for charities rather than a ‘nice to have’ addition to basic insurance cover.
The reason for this is that the sensitive information held by many charities on their clients makes them a target for many cyber criminals. Sensitive client information such as risk assessments, donor information and bank details could all have disastrous implications for a charity if it falls into the wrong hands. And the consequences are not only financial as the damage to reputation could be significant too.
Having a cyber insurance policy in place can cover losses relating to damage or loss of information from your charity’s IT systems and networks. A good cyber policy will include help with the management of an incident when it occurs, which can be crucial at a time when you are faced with the prospect of reputational damage or regulatory enforcement.
Any vehicle that your charity owns that is used on the public road, whether it’s a minibus, car or van, will need to be properly insured.
Fidelity insurance protects charities against the loss of money or goods as a result of dishonesty or fraudulent acts committed by trustees, employees or volunteers. This cover may be appropriate for your charity if it receives large donations or deals with valuable assets or goods.
- Business interruption/loss of revenue insurance
This type of policy provides cover if the charity suffers a loss of income or is unable to operate due to damage caused by an insured event such as a fire, theft or flood.
- Buildings and contents insurance
If your charity owns or is responsible for the maintenance of any buildings, then buildings insurance will provide protection against fire, theft and floods. Contents insurance covers the goods inside the building, such as computers, machinery, stock, audiovisual equipment and anything else that would be expensive to replace.
If your charity does work abroad or you attend conferences overseas, group travel insurance will cover trustees, employees and volunteers for any damage or loss to insured property and any medical expenses incurred.
- Commercial legal expenses insurance
This policy covers the cost of your legal defence for any employment, health and safety or contract disputes that may arise in the course of your work.
Charity insurance specialists for complete peace of mind
At Scrutton Bland, we don’t want anything to get in the way of the important work you do. We put charity insurance policies in place that protect you against the specific risks you face and offer exclusive terms to make sure you don’t pay a penny more than you need to.