Apart from compulsory insurances, there are many other insurances available to your organisation. Included below is a selection of the most common insurances taken up by charities, social enterprises and faith-based organisations. There are numerous more insurances than can be listed here.
Please note, some insurers use different names for the same sort of insurance and the exact cover provided by insurances of the same name from different insurers will vary depending on the Policy Wording and your contract of insurance.
Public Liability and Products Liability
You really should have this cover from the first moment that your organisation starts to become active or takes up premises. The policy provides cover for claims made against you by third parties which arise from damage to their property or injury you have caused to them. Products Liability covers you if a product you sell or supply causes injury or damage, and is normally an automatic (and typically, free) extension to the Public Liability policy.
Do make sure you are buying a specialist policy which fully recognises the unique needs of the sector in general and your organisation. There is no substitute for getting good advice from a specialist insurer.
A good specialist policy will extend to include liability arising out of:
- breaches of Data Protection legislation
- unintentional libel or slander
- abuse and molestation
- ‘care and treatment’ activity which you undertake, although it will stop short of covering medical interventions and clinical trials – see Medical Malpractice below.
- ‘member-to-member’ cover, especially where groups, clubs or societies face the potential risk that injury or damage is caused by one member against another
Make sure that the insurer fully understands what you do, and how you raise funds and deliver your services – they should include this in your business description and provide you with a cover on a broad-ranging basis, so that you don’t have to keep asking if you’re covered for a new activity.
Trustee Indemnity insurance should cover you for most if not all potential actions by stakeholders alleging wrongful acts by those responsible for the running and management of the ‘business’. Stakeholders could include funders, commissioners, service users, and indeed regulators.
The term Trustee Indemnity is synonymous with Directors & Officers insurance, and can also apply to entities run by a board, management committee or similar structure – in essence, the policy covers a claim against either the legal entity, the individual trustees, directors and managers, or both. Cover is relatively inexpensive. Very few claims lead to a successful action against trustees for financial compensation, so the main benefits will lie in having an insurer supporting you in handling and defending the claim, or assisting you through an investigation.
Sometimes cover is not purchased because the Trustees feel that they are protected by the Entity by means of a counter-indemnity but it should still be considered as appropriate in order to avoid the entity needing to use its funds for purposes of indemnifying its trustees. Some trustees still (wrongly) believe they are not permitted to use entity funds to buy this insurance, but the 2006 Charity Act permits a charity’s Articles of Memorandum to be amended to allow for this.
Read more about Trustee Indemnity Insurance in our article dedicated to this topic.
Rarely valued, but often used, Legal Expenses insurance provides a helpful service which normally incorporates a telephone-based advice line (including useful elements of risk management such as legal templates) backed by certain elements of insurance where that advice is followed but subsequently found not to avoid or mitigate a claim against you. A key element of cover is the provision of initial advice in the early stages of employment-related changes which you plan to implement and where relevant, legal advice through the ensuing process if employment disputes arise. Most good policies will include protection against any ultimate tribunal award against you.
Professional Indemnity protects you against claims that your wrongful acts (typically negligent acts or breach of duty) have led to someone suffering loss (normally financial loss) where they were relying on you to exercise reasonable skill and care in providing them with professional, advisory, design, counselling, and sign-posting and other services requiring such skill and care. Where the skill involved is of a medical, psychiatric, or similar nature (perhaps best described as where you are delivering services to someone who comes to you in the expectation of receiving treatment), you will also need to consider cover for Medical Malpractice.
One word of caution. Most professional Indemnity policies provided to charities and social enterprises do not envisage covering the professional (regulated) advice of certain professional such as solicitors, accountants, architects, financial advisers or medical professionals whose professional bodies require them to take out cover either with specified insurers or on the basis of specified policy terms and conditions. So, if you do provide any regulated professional services, you may need a specialist (and often expensive) separate policy.
Property/Material Damage, Goods and Money
Approaching property insurance is simple:
- What property are you obliged to insure? Does your landlord, hirer or finance provider require you to insure physical assets such as the building you occupy or the equipment you hire?
- What property do you want to insure, because in the event of a maximum possible loss, you could not easily fund its replacement?
After that, it gets a little bit more complicated …
If you are insuring a building, valuables and art works, or other items which are susceptible to movements in value which may not be aligned to typical levels of inflation, check when you last had these professionally valued. Up- date your sums insured annually by carefully reviewing them against your asset register. Up-date your valuation- based sums insured at least every 5 years (every three years is ‘good practice’ and may even be a requirement for some insurers). Make sure that you include in your insurance declarations the value of any Tenants Improvements where, for example, you have spent money on internal fittings and alterations at a premise which you do not necessarily own. And include the value of outbuildings and other related structures.
Check that your policy covers you for the new replacement cost of any items lost or damaged, and ensure that you advise your insurer of the full replacement value (not the value written down in your accounts which will generally have depreciation built in). Should you insure against risks of terrorism and civil unrest? Certainly, if you are located in a key city centre, or adjacent to a site with potential exposure to such risks, then you should consider this as an extension to your property insurance.
Check that you comply with your policy requirements, especially those concerning security (locks, alarms and the like).
Check whether you are susceptible to loss (for example, theft) in circumstances where forcible or violent entry may not be required to access your premises. For example, where you share office space or have no protected entrance to your own area. Most insurers will exclude theft unless by means of forcible or violent entry, but you can request them to provide this cover.
If you are involved in storing or selling donated items (for example, through a charity shop), think about the stock value to you and insure it appropriately (which may mean insuring it as a Business Interruption item – see below). You will also be able to insure your on-going rent obligations if your lease makes you responsible for paying rent even where the premises are lost or damaged.
Where you are exposed to potential financial loss as a result of you losing rental income (for example, where you sub-let), then this will be a Business Interruption item.
Check that you are providing the intended cover for employees’ effects as well as those of service users, not least where you are providing residential services.
If you have any contents which are taken away from the premises, for example laptops and exhibition equipment, check that these are properly declared and covered on an ‘all risks’ basis – and for the appropriate territories if being taken overseas.
And don’t forget …
- Goods in Transit (covers goods which you transport, send or receive)
- Money – covers cash in safe and elsewhere on the premises, as well as cash bankings. You should also consider any exposure to fundraising cash collections (and how you can account for these).
Events and Exhibitions – Public Liability, Property etc.
You should be able to include cover for Public and Products Liability within your general annual insurance arrangements, but sometimes a specific event may fall outside the scope of that policy, or require some enhanced cover.
More likely, you will need to insure some property for which you become responsible on a temporary basis – marquees, staging, lighting and so on – and you may need to arrange cover for cash fundraising. In particular, think about the potential financial impact of an event being cancelled, or cut short.
This will cover you for the financial consequences of an event which you have organised being cancelled or curtailed (due, for example, to adverse weather, unavailability of the venue, or lack of access to the venue). It can also cover the effects of non-appearance of key participants such as key-note speakers and stage acts. Cover will consider both your pre-event costs and your post-event loss of projected income.
Read more about Event Cancellation Insurance in our article dedicated to this topic.
This is intrinsically linked to (and cover is triggered by claims under) your property insurance, and covers you if as a result of loss or damage to your insured physical assets you suffer consequential financial loss to your business through interruption of turnover, loss of income, additional expenses. In the not for profit sector, where income is less dependent on trading revenue, “Additional Expenses” is the most common element of insurance required, to allow for the costs involved in moving to alternative premises and extra rental or lease costs.
This can be insured by the charity and is useful if several trips are planned during the year. Travel Insurance is easily arranged but beware that travel risk is not really about whether someone misses their flight or loses their luggage – that is travel ‘inconvenience’. Travel risk is the potentially ruinous cost of medical repatriation in the event of serious illness overseas. Or the need for specialist help and the costs associated with negotiating release following a kidnap and ransom demand.
If an employee or volunteer is travelling on a cheap, online, personal travel policy, be aware that most insurance policies will not provide cover automatically for travel where the Foreign & Commonwealth Office advises against visits and may have limitations on activities whilst abroad. You should always check the FCO website before allowing someone to travel at your risk.
You should have a generic Risk Assessment which you complete regarding the general subject of travel by your trustees, employees and volunteers. You should also create territory-specific assessments if travel becomes necessary to areas where the Foreign & Commonwealth Office advises against visits. Ask CaSE Insurance to supply you with some templates for travel risk assessments.
Equipment Breakdown insurance provides you with cover for the direct losses experienced following electrical or mechanical breakdown of covered equipment. As well as electrical and mechanical breakdown (including explosion or collapse), this section of cover includes operator error leading to breakdown.
This insurance may be included as standard if you have either property or contents insured as it is a useful addition to these covers.
There is a well-founded fear of malicious hacking. This is very much in the news and insurance has developed to meet the needs of organisations whose trading income can be severely affected by loss or impairment of online connectivity and effective sales completions and those storing sensitive information. Many charities are encouraged to consider this cover but, we suggest, often without being fully aware of the cover they may already have within their other policies (if properly constructed).
We would suggest that for many organisations, the first priority should be a properly considered Business Continuity Plan with well-constructed references to technology use and loss of data. In addition, consider on-line exposures within social media where the general public may be able to easily access sites on which your organisation either hosts or contributes to forums and discussions and where you may become linked to or associated with potential claims alleging libel or slander, or infringement of copyright, or breaches in data protection legislation.
Review your insurances and make sure in particular that your Trustee Indemnity Policy, Public Liability Policy, and your Professional Indemnity Policy should all be well- constructed specialist, fit for purpose documents which protect you for many of the on-line exposures you may face – and at little or no extra cost! Should you still require additional Cyber cover, then look into this particular type of insurance.