Times are tough, no doubt about it. Spiralling inflation and increasing costs are putting a strain on every part of the UK economy, the third sector included.
Meanwhile, households are being hit hard. Rising prices, soaring bills, and higher rents and interest rates are all part of a damaging mix that’s stretching people’s finances to the limit.
Neither does there seem much hope of respite anytime soon, with the economic forecast set firmly to ‘stormy’.
So, while demand for charities’ services is mounting, the cost of delivering those services is going up too. And all this against a background of a lack of spare cash in people’s pockets…which usually translates to a fall in donations.
Time for a trim?
With money tight, everyone’s looking to make savings. The same goes for charities.
But with no one wanting to cut back on services, how can charities make their funds go that bit further? What can be trimmed and what can they potentially do without altogether?
If your charity insurance is on your list of possible economies, that’s understandable. There may be a nagging voice in your head, asking: ‘Could your organisation maybe get by without insurance? How often do you claim after all?’
But before doing anything like cancelling your policy, it’s important to understand what that means. And what the risks are.
The first thing to consider is what might happen if you didn’t have cover. Getting sued can be a very expensive and uncharitable experience once you factor in legal costs and any compensation you have to pay.
A public liability claim for a mishap at a fundraising or club event could easily wipe out any funds raised…and much more besides. Claims for bodily injury after someone’s been accidentally hurt can run to many £thousands after all.
The same goes for claims your work wasn’t up to scratch if your charity offers a service or advice. Allegations like these are covered by your professional indemnity insurance. And we all know how expensive legal wranglings can get.
What if you’re a trustee? Always remember trustees can be held personally liable if a charity’s accused or wrongdoing - like misappropriating funds or deviating from its stated aims.
Claims like these could land heavily at your door. And without trustee insurance, you’ll have to pay to defend them yourself, as well as covering any fines and compensation. That can put your own finances seriously on the line.
So before cancelling any of your cover, it’s important to weigh up whether it’s a corner really worth cutting. Or whether it could turn out to be a financially ruinous false economy instead.
Another idea people sometimes toy with in straitened times is stopping their policy for a while. In other words, saving some pennies until things get easier.
It’s a high-stakes game, though. Because you-know-who’s law says the worst will happen at just the wrong time. And even if you haven’t claimed on your policy until now, there’s no knowing whether you might need to tomorrow.
In fact, if you have professional indemnity (PI) insurance, it’s doubly risky. That’s because PI relies on your cover being active not only when a claim’s made, but when the ‘work’ was done. And no continuity of policy at either point = no valid claim.
Similarly, if you have employers’ liability (EL) insurance, you have it for a reason. The law. It’s illegal to have staff and not to protect them with EL.
It covers legal fees and compensation if employees or volunteers are made ill or injured in the course of what they do for you. If you don’t have it, or you cancel it, the Health & Safety Executive can fine you £2500 for each day you were mean to have it…but didn’t.
The only way is up
There’s no doubt that ongoing inflation means things cost more than they did. And that makes now a good time to check your contents and equipment level of cover.
It very much depends on what your charity does, of course. And how much stuff you have. But will the kit you rely on still cost the same to replace? Best to check today’s price tag instead. Then make sure your cover is sufficient.
It’s a good idea to check your buildings insurance too. Construction costs have gone through the roof. And if you own your premises, your cover needs to be enough to pay for a rebuild at today’s prices, not last year’s.
So, things are tough. And your services may well be more in demand than ever. That makes keeping costs under control crucial. But not at the price of cutting off your nose to spite your face.
For our part, we’re working hard to keep premiums as low as possible. Because we’re an independent broker, we can choose which insurers we work with. And that means we’re always on the look-out for the best policies at the best prices.
As things stand, it seems we’re all going to have to tighten our belts and wait for things to get better. But if you’d like any advice about your insurance in the meantime, you can visit www.policybee.co.uk/FSI or call 0345 222 5399 to chat to a friendly expert.
PolicyBee is an independent insurance broker. We help your charity get the cover it needs quickly and easily. We specialise in insurance designed specifically for small charities. Or call our award winning, jargon-busting customer service team on 0345 222 5381