Do your trustees sleep easy?

Risk and risk management is a hot topic for the voluntary sector, and I have been wondering how many charities have taken the first step in protecting their charity and their trustees by buying trustee insurance?

CaSE insurance, an NCVO Trusted Supplier, have explained what insuring your trustees means and why it’s something you should consider.

What is trustee indemnity insurance?

Charity trustees may have a financial liability for their actions should something go wrong when working on behalf of the charity. Trustee indemnity insurance is specifically designed to cover potential legal costs and awards made against them personally. With CaSE Insurance, the charity is also protected.

Do you really need trustee indemnity insurance?

There is no legal requirement to purchase this type of insurance however CaSE call it a ‘sleep easy’ cover for trustees. It’s a policy which will reassure your trustees that they are personally protected and not exposing your charity to undue risk.

Protection all round?

Depending on your charity’s constitution, there may be a limit to the liability of trustees – this is helpful for individuals in protecting their personal assets. Your charity may also commit to indemnifying trustees using your charity’s funds, reserves and assets. Either way, trustees need to consider whether it’s sensible to risk or deplete charity resources in this way.

Equally, it should also be checked that any legal framework allows for charitable funds to be used to purchase this kind of cover. It is relatively straightforward to make any required changes to your insurance policy and it’s good practice to review your existing articles from time to time. The Charity Commission website provides model governing documents which may be helpful to you.

What happens when claims or investigations arise?

Insurers will have extensive experience, and can call upon expert advice, to protect and assist trustees when claims or investigations arise. Having insurance can be a useful support mechanism and insurers will often take over the running of the claim leaving staff and trustees free to get on with their day jobs.

Dealing with the unexpected or unaffordable

Most cases involving allegations of wrongful acts by trustees can be successfully defended, so insurance is primarily involved in meeting defence costs rather than awards. Trustee indemnity insurance meets costs involved not just in wrongful acts, but also of ‘investigations’ eg by the Charity Commission and HMRC.

Cover is relatively inexpensive so the decision is about taking sensible steps to make sure that there’s a mechanism in place for dealing with the unexpected or unaffordable.

How much cover do you need?

There is no ‘right or wrong’ about how much cover to buy but it makes sense to buy enough to reassure your trustees that they and the charity are protected against the unaffordable. CaSE Insurance produce a guide that shows typical indemnity limits based on size and type of charity. For a free copy, please email Huw Evans at CaSE.

Find out more

See how NCVO’s Trusted Partner CaSE insurance can support you.

The Charity Commission website has comprehensive guidance on charities and insurance.

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Chris Taylor Chris Taylor is our enterprise development manager. He works with our Trusted Suppliers to help voluntary organisations to explore new ways of working and save money.

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