What insurance do charities need?

Running a charity comes with risks and rewards. At Charity Digital, we’ve covered operational risks like cybersecurity and staff burnout. When it comes to insurance matters, we take a look at what to look for and what policies cover.

 

For charities of all shapes and sizes, it’s important to have a safety net in case of accident or emergency.

 

 

What is charity insurance?

 

Insurance is a type of financial product that pays out when something happens. They provide financial compensation when an undesirable event occurs.

 

There are policies which pay legal fees and damages if claims against a charity are successful. With an insurance policy in place, charities avoid having to pay out a large, unexpected sums out of pocket.

 

 

The UK Government requirements

 

Charities must have insurance. The UK Government offers practical advice on how to insure your charity. To meet the legal requirements, charities with paid staff are obliged to have employers’ liability insurance.

 

The insurance provides compensation to employees if they become ill or injured at work. The plan has to cover at least £5 million worth of claims. The policy certificate must also be displayed on the premises.

 

Charities that don’t comply with the requirements can be fined. Fines are £2,500 per day without insurance and £1,000 for not displaying the certificate correctly.

 

 

Basic public liability insurance

 

Most businesses, non-profits, and charities have more than just basic employers’ liability insurance. Public liability insurance protects charities against third-party damage claims.

 

Policies provide a safety net for contractor work and anyone on premises that is not an employee. If a contractor is accidentally injured on site, they may choose to sue for damages and pursue compensation. A charity’s public liability insurance protects against legal fees and pays out for damaged goods or injury.

 

A good public liability coverage plan takes care of fundraising events and any services on site. Zurich, one of the UK’s providers, offers tailored plans for charities. A standard policy includes coverage for volunteers. This includes accidental property damage, injury, and compensation of legal fees.

 

 

Making sure you can still carry on, no matter what

 

Business interruption or business continuity insurance adds cushioning to public and employers’ liability. Markel UK, an insurance provider, says that the insurance "cuts in following a claim made against your building or contents insurance, and covers financial losses that are a direct consequence of a business interruption, such as loss of revenue, loss of rental income and additional staff costs”.

 

In practice, business interruption insurance helps charities get back on their feet after a disaster. As an example, it may be that following a building accident the property and contents insurance covers off the repair. However, what is normally not covered, is the downtime.

 

There may be a period of weeks or months where the building is unavailable for charity purposes. Under those circumstances, operations might be forced to cease. If that’s the case, business interruption insurance provides compensation for when a charity can’t carry on.

 

 

Professional indemnity for trustees and staff

 

Professional indemnity insurance is popular among directors and trustees.

 

As part of their roles, trustees give advice and steer charities on course. There may be times when mistakes happen and legal disputes follow. Senior staff can insure themselves against the financial consequences of any legal claims.

 

Hiscox, another insurance provider, emphasises how important this type of insurance is. They say: “Trustees, directors, officers, committee members and governors of public organisations can be held personally responsible for decisions and actions made on behalf of their organisation.

 

"They may also be sued or prosecuted for any mistakes and their consequences, during the performance of their duties. If you hold one of these roles, you need trustee indemnity insurance.”

 

Trustees might want to take out this type of protection because it covers the personal costs of legal defence and any awards.

 

 

Other types of insurance

 

Tailored insurance policies are desirable for charities with physical and rare assets. This applies to charities looking to insure land, buildings, and special objects. Property and contents insurances are available for non-profits and charities. Ecclesiastical, an insurance provider, offers coverage.

 

A sample plan includes protection against building damage. The insurer pays for repairs and/or replacement from theft. Under most policies, general amounts are allocated for contents and non-property assets. For special items like rare arts, books and other artefacts, charities might opt for additional coverage.

 

Similar to personal policies for cars, trucks, and travel, charities can take out insurance in these areas. For example, insurance brokers Third Sector Protect offers cyber, vehicle and event protection. There are other online providers, including Policy Bee, Endsleigh, Bollington, and Access Insurance.