What insurance does my charity need? And how can it help?
Charity begins at home, so they say. And it’s a pretty safe bet you’ve made sure your house and contents are insured. But what about your charity? Does it enjoy the same level of protection?
Keeping your house in order
In these challenging times, resources are stretched and every penny counts. That can mean matters of housekeeping like insurance slip further down the priorities list. Sometimes off the list altogether.
But there’s a lot that can go wrong when you’re running a charity – in much the same way it can when you’re running a business. And that can make scrimping on your cover nothing short of a false economy.
If a problem arises and a claim for damages comes in, it can leave you severely out of pocket. A double whammy of court costs and compensation can even spell the end of the road for some charities, and hit you personally if you’re a trustee. (More about that later.)
Don’t forget insurance is a legal obligation in some cases, too. Like if you have employees. The law says you need to protect them with insurance, and if you don’t, there are steep fines to pay.
So what kind of insurance do you need for your charity? And how does it help? Well, it kind of depends on what your charity does, and how it’s structured…which means you need to ask yourself a few questions.
Tried and trusted
Are you a trustee? Are you involved, either solely or together with others, in raising and investing charity funds? And if so, did you realise you’re personally liable if there’s a claim against your charity?
Say someone insists funds haven’t been used in the intended way, and it triggers a law suit. If a judge upholds the claim, that’s your pocket in danger. They can even come after your personal assets like your car or house.
Trustees’ insurance offers protection and peace of mind by paying for legal costs and an expert to fight your corner. It also covers any damages and your personal financial liability.
Does your charity hold fundraising events – whether that’s simply the odd coffee morning, or a full-on fun day?
Say someone trips over a carelessly draped cable at an event and falls, breaking their wrist and smashing their smartphone. They’re going to want compensating.
Murphy’s Law has a role to play, too. A tea urn could topple over and splash boiling water over someone’s foot. Or heavy rain could bring a marquee down on people’s heads, causing injuries in the process.
This is where public liability insurance comes in, because it stumps up for legal costs and damages if someone claims it was your fault they or their property came to harm at an event.
Law & order
Do you have any employees? If the answer is ‘yes’, then you should already have employers’ liability insurance. It’s the law. And if you don’t have it, the Health & Safety Executive (HSE) can fine you £2,500 for each day you were without it. Ouch.
You also need to think about what constitutes an ‘employee’. It means not only full-time staff but includes any part-timers, temporary staff, seasonal helpers and, of course, work experience kids and interns.
And then there’s the issue of volunteers. The HSE puts a very wide interpretation on the term ‘employee’ and says it includes anyone who takes direction from another and uses their equipment.
Likewise, the Charity Commission’s guidance is for charities to treat volunteers as employees, and to make sure they’re covered by insurance.
A bit of a grey area, then, but the intent is clear. If someone is generous enough to give up their free time to help your cause, isn’t it your ethical duty to make sure they’re protected?
Employers’ liability insurance covers legal costs and damages if an employee or volunteer, or their property, suffer any harm while working for you.
Does your charity provide advice or services? If so, there’s a chance it could be liable for financial losses suffered by the very people it’s set up to help.
Say a pensioner claims their excruciating back pain is the result of being lifted incorrectly from a chair by one of your charity’s carers. Or someone recently made redundant takes advice from an enterprise charity to start their own business, but loses everything.
Situations like these can lead to claims of compensation for negligence.
Other questions to ask yourself include: does your charity have a website where the words written there can be construed as advice? And does it have a forum or blog, where people can leave comments?
The first can lead to claims against you for bad advice. And the second can prompt accusations of defamation. Remarks left on your site that single out individuals or organisations and cast them in a bad light can spell real trouble.
Professional indemnity (PI) insurance helps in all these cases, providing legal clout and covering compensation when a claim comes in.
As its name suggests, PI gives your organisation a professional edge. With a rising number of charities now providing services under contract, especially in the public sector, it’s even becoming a requisite of the tender process. No PI can mean no contract.
No place to hide
So that’s the big hitters of charity insurance taken care of – the kind of policies that’ll give you and your organisation a solid layer of protection. Together they provide the resources you need to deal with a claim and pay any compensation.
Remember also that a claim doesn’t have to be justified to land you in court. Even if it’s ultimately unsuccessful, you’ll still have to spend precious time and money fighting it. Just because you’re a charity, the bad news is that it won’t stop people suing you.
For a no-nonsense quote click here, or to speak to a friendly adviser call 0345 222 5381