Making your buying decision: charities can be unsure about whether they need Trustee Indemnity Insurance and how much cover is appropriate. We hope this article helps trustees make an informed decision.
Do you need Trustee Indemnity Insurance?
There is no legal requirement to purchase Trustee Indemnity. At CaSE Insurance, we call it a ‘sleep easy’ cover for trustees – literally a policy which will reassure trustees that they are personally protected and not exposing the charity to undue risk.
- Depending on the charity’s constitution, it may be able to limit the liability of trustees – this is helpful for individuals in protecting their personal assets. In fact, the charity may also commit to indemnifying trustees using the charity’s funds, reserves and assets. Either way, trustees need to consider whether it is sensible to risk or deplete charity resources in this way. If the Trustee Indemnity policy is properly arranged it will protect both the organisation and the individuals.
- Insurers have extensive experience, and can call upon expert advice to protect and assist trustees when claims or investigations arise. They are therefore a useful support mechanism and insurers will often take over the running of the claim leaving staff and trustees free to get on with their work (and of course, their day-to-day jobs).
- Most cases involving allegations of wrongful acts by trustees can be successfully defended, so insurance is primarily involved in meeting defence costs rather than awards.
- Trustee Indemnity meets costs involved not just in cases of wrongful acts, but also of ‘investigations’ – e.g. by the Charity Commission and the HMRC.
Cover is relatively inexpensive, so the decision is about taking sensible steps to ensure that the trustees have in place a mechanism for dealing with the unexpected or unaffordable.
How much cover do you need?
There is no ‘right or wrong’ about how much cover to buy but it makes sense to buy enough to reassure the trustees that they and the charity are protected against the unaffordable. As a specialist provider, we have data on what level of cover is taken out by charities of different income levels, and you may find the summary below useful.
The summary table indicates, for example, that 72% of organisations with an income of less than £10k p/a, that bought Trustee Indemnity, took out £100k of cover, 19% took out £250k of cover – and so on…
How can you arrange Trustee Indemnity Insurance?
You can get a quote for Trustee Indemnity on our website.
If you want Trustee Indemnity and other types of cover, try: www.caseselect.co.uk.