Charity Insurance - Typical Exposures

1) Liability of it's Directors

If a charity is incorporated the potential liabilities of its directors can be daunting.

1. Health and Safety at work Act
2. Data Protection Act
3. Consumer Protection Legislation
4. Financial Services Act
5. EU Directives and Regulations
6. Racial, Sexual and Age Discrimination Legislation
7. Disability Discrimination Act
8. Companies Act 2006
9. Insolvency Act – (wrongful trading)

2) General Liabilities

Trustees of charities often give advice or offer services in their everyday running of a charity and therefore can open themselves up to personal liability claims, for neglect , errors or omissions, there is no protection against these commercial liabilities unless an insurance policy is in force. Which in the main would cover the charities for the defence of an allegation and should the charity then have been found to be neglectful in their duties, cover the damages costs liabilities up to the chosen level of insurance cover.

In general the charity needs a broadly worded policy to indicate cover for the following exposures:

1. Liability for Directors
2. Professional Indemnity Cover
3. Use of funds collected (not financial loss of investment themselves)
4. Fidelity – dishonest, fraudulent or criminal acts of managers or employees
5. Loss of Documents
6. Executive covers – liabilities
7. Employment practices liabilities i.e. employment disputes including cost for things such as official investigations enquiries, health safety etc
8. Indemnification of innocent trustees / directors of the charity

The list could go on, but clearly most charities should consider seriously their vast exposures in these areas and obtain suitable insurance covers to protect their employees, trustees and directors and the very structure of the charity itself.

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