Is Insurance Needed? A Charity’s Guide

Charity Shops

With countless charity insurances on the market, finding a cover that is relevant for your charity or organisation can be a difficult and challenging task. Insurance is a form of risk management, which is intended to protect an organisation or an individual from a possible eventuality. With charities being a high risk sector, taking out cover to protect your charity should always be considered. By law, there are covers that are mandatory to protect both your charity and employees in case of risks that may arise. These include:

  • Employers Liability: Employers Liability Insurance is mandatory for any UK charity, not-for-profit organisation or CASC with employees. Under the Employers Liability Act 1969, employers must take out a minimum of £5million in insurance cover for protection against injury or disease that may occur during an employee’s duration at the workplace.
  • Motor Insurance: If your not-for-profit organisation uses, operates or owns any vehicles, under the Road Traffic Act 1988, it is mandatory that insurance against third party injury or damage to cars is taken out. If employees have their own vehicles, which they will be using for the benefit of the charity, it is the charity’s duty to ensure that they are insured before work is carried out.

Although not mandatory, there are a range of covers to protect charities further from risk. These come highly recommended by the commission and should be considered by all charities where necessary:

  • Assets, Contents and Property Damage: If your charity owns or rents property, it may be worth exploring the option of cover against theft and damages made to your property and any assets and stock you own. Where property is involved, charities should seek a surveyor to determine the correct insurance sum.
  • Trustee Indemnity: There are cases where a trustee may make a mistake or something goes wrong. Trustee indemnity insurance protects both the charity and the trustee against any liability they have from any wrongdoing committed by a trustee. This insurance acts as a reassurance to any potential risk that may arise involving a trustee.
  • Public Liability Insurance: Public Liability Insurance offers charities legal and liable protection if an individual/s were to suffer a loss or injury due to the charity’s actions or activities, which may lead to the individual taking out compensation. This insurance often covers two areas of risk: Liability at your property and Liability away from your property.
  • Professional Indemnity / Professional Liability: If your charity offers advice, handles data or provides a professional service, professional insurance may be an ideal cover to take out. This protects charities from being held liable for any losses and damages that could have arose from the service provided.

Charities should refer to the Charity Commission CC49 guide for more information. If you wish to discuss charity insurance in more detail, please contact me at suda@raffingers.co.uk.