There are almost 200000 registered charities in the UK, many of which are small and have very few (or no) employees. Do these small charities need insurance?
The Charity Commission provide clear guidance on the legal minimums:
“Charities that employ staff are required by law to buy Employers’ Liability Insurance. Charities that own or operate motor vehicles are required by law to buy Motor Insurance.”
These requirements are straightforward.
If your charity employs staff (and this is the definition of employees who require cover) then you are legally obliged to buy Employers’ Liability Insurance with a minimum indemnity limit of £5 million, but £10 million is standard. Similarly, if you operate vehicles, you are required to insure them in line with Road Traffic Acts.
Less straightforward, however, is the position for volunteers.
Under many standard ‘business’ insurance policies, volunteers are not considered to be on an equal footing with employees and are not covered under Employers’ Liability. This is where specialist advice and policies can benefit charities, as on many specialist insurance policies, such as CaSE’s Charity Insurance, volunteers are covered under Employers’ Liability.
Treating volunteers as employees provides charities with the much-needed financial protection in the event of accidents. It also provides volunteers with assurance that you care about their welfare, have robust risk assessments and that, in the event of an accident, they have some financial recourse. And, of course, this makes it easier to attract and retain high quality volunteers.
Another factor to consider is the trustees’ duty to their charity.
All charities face risks and most charities can benefit from the protection that insurance provides. And trustees have a duty to protect their charity’s resources and assets. Where an insurance is not legally required, it is often a risk assessment that will identify the need for a certain insurance.
If insurance is the best way to manage certain risks, a trustee should have it. If they don’t, they may not be fulfilling their duty to protect their charity’s assets. Equally, a trustee must ensure that insurance is only purchased if it is financially sensible to do so. Charity trustees may consider business interruption insurance for charities that would be financially impacted by their operations being disrupted, or professional indemnity insurance for charities that provide counselling and advice services.
CaSE Insurance strongly recommend that charities follow the Charity Commission advice and take advice when considering risk management and insurance requirements from a specialist insurer.
“The important point is to use a broker or insurer with specialist knowledge of the insurance requirements of charities to ensure that the correct coverage is arranged at a competitive price.”
CaSE Insurance offer CaSE Select, a specialist charity policy for smaller non-profit organisations; CaSE Charity Insurance, a comprehensive insurance policy for charities, social enterprises, voluntary groups and not-for-profits; and CaSE Faith Insurance, our policy designed specifically to meet the needs of faith-based and religious organisations.