Charity insurance

What is charity insurance?

Charity insurance provides protection when things go wrong, like someone being injured at the office or an event, or a trustee being accused of negligence.

Business insurance for charities and not-for-profit organisations includes things like public liability cover, employers’ liability, trustee liability and cyber insurance. Different policies are available to suit the needs of large organisations, smaller charities and community centres.

What insurance does a charity need?

There are a few elements of business cover that all charities should consider, regardless of their size.

If you employ staff, including volunteers, you are legally required to take out employers’ liability insurance. This protects your employees for injuries in the workplace and covers you in case one of them takes action against you.

Trustee liability is another important element of cover. It protects you in case one of your trustees is accused of negligence or malpractice. This offers similar cover to professional indemnity insurance, and might be called that for certain policies.

If you have your own premises or run events, you’d want to take out public liability insurance, which helps with legal fees and compensation payments if a member of the public (including people fundraising for you) is injured and your charity is liable.

Why do charities need insurance?

Most charities run on a very tight budget and have no cash to spare, especially not for legal fees and compensation payments in case legal action is brought against them. Having insurance means you won’t have to clear out your charity’s pot if this happens, as you will have help to cover the expenses involved.

If you have your own premises or use a van to get to and from events, consider adding business contents insurance and van cover to your policy, to protect your property and vehicle against any damage or criminal activity.

If you employ staff, including volunteers, you are legally required to take out employers’ liability cover, so make sure you have at least that in place.

What does charity insurance cover?

Specifications will vary by insurer and depend on the type of policy you choose to suit the needs of your organisation, but charity insurance cover can include the following:

• Trustee indemnity insurance. Also known as indemnity insurance, this protects your organisation in case one of your trustees is accused of negligence or wrongdoing. Indemnity claims can run to millions of pounds, so protecting yourself is paramount.
• Public liability insurance. Public liability insurance for charities protects you in case a member of the public is injured or their property is damaged and your organisation is responsible. For example, if someone injures themselves while at a fundraising event run by your charity.
• Cyber liability insurance. Chances are you keep your files and data online, or at least stored on a computer (even if you have hard copies in your office). Unfortunately, this leaves you vulnerable to data breaches from someone hacking into your system and stealing valuable information about donors, volunteers and staff. Cyber insurance protects you in case this happens and a claim is brought against you by the person or persons whose data was compromised, and even helps with ransom demands from hackers. It also helps protect the data, to reduce the chance of a breach happening in the first place.
• Employers’ liability insurance. If you employ staff, you are legally required to take out employers’ liability insurance, to protect your employees and yourself against legal action. This includes volunteers and unpaid interns.
• Contents insurance. If you have your own premises, business contents insurance can cover your furniture and computer equipment against a list of insured incidents (like flood and fire damage), as well as help to replace your employees’ personal belongings if they’re damaged, lost or stolen. It might also cover the fixtures and fittings of the building, but if you rent your premises rather than own it, the landlord may have this covered under their buildings insurance. Make sure you check with them if you have any doubts.

Other types of cover you might wish to take out include:

• Van cover. If you use a van to get equipment to and from events, you’d want to take out van insurance. This type of policy often includes cover for equipment, as well as other benefits found in regular car insurance. It’s important to note that most car insurance policies don’t include business use, so it’s worth checking the details of your policy if you use your car as part of your work for the charity.
• Product liability insurance. If you have a shop (whether a physical one or online) that sells products, product liability insurance can protect you in case one of the products causes harm to a customer. Note that you don’t need to have manufactured the product to be liable for any damage it causes.
• Legal expenses. While liability compensation payouts can run into millions of pounds, other costs involved in a court case can also be a serious burden. Legal expenses cover can help you in case action is taken against you.
• Fidelity insurance. Unfortunately, no organisation is safe from fraudulent activity against it, and charities are no exception. Things like fabricated invoices, fraudulent expenses and donation theft can occur at organisations of all sizes. Fidelity insurance pays any losses your organisation incurs as a result of such actions (up to the limit set by the insurer).
• Occupational personal accident cover. Personal accident insurance helps your charity’s volunteers and employees if they are accidentally injured in the course of your activities. The exact specification and cover limits vary by insurer but usually include either a daily allowance or lump sum for things like disablement, loss of sight or limbs or death.

Common claims examples

• Injury at an event. Charity fundraising events can be a hectic environment and it’s easy for someone to trip over a piece of equipment and injure themselves. Having public liability insurance for charities in place can help with legal costs and any compensation payments you might have to pay if action is taken against you.
• Targeted by hackers. Cyber crime is on the rise and hackers are always finding new ways of getting hold of people’s data. Cyber insurance helps to protect the data stored on your devices, such as information on donors, volunteers and staff. In case a hacker manages to breach your system, cyber insurance can help with legal expenses and compensation should action be taken against you, and even pays the ransom money if the hackers demand that in order to return the stolen information.
• Storm damage. If your office is damaged by a storm, having business contents insurance will help replace the items inside, such as furniture and computer equipment. Any damage to the building itself (including fixtures and fittings) will require buildings cover. If you rent your premises, this might be covered by your landlord, but make sure to check exactly what is and isn’t included.

Frequently asked questions

• Does my charity need cyber insurance?

  If you store any data on your devices or the cloud, then yes. Cyber crime rates have been increasing in recent years and hackers are always finding new ways to steal data they can sell or hold for ransom.

  You have a duty to your donors, volunteers and staff to protect their personal information. Cyber insurance helps to protect your data in the first place and, in case hackers do manage to get hold of it, can pay ransom fees and compensation claims, as well as help restore your charity’s reputation.

• Why I need insurance for volunteers?

  Even if they are not paid, volunteers are still considered members of staff and so you are legally liable for their wellbeing while they are performing duties for you.

  Employers’ liability insurance includes cover for volunteers and unpaid interns. Freelancers might not be included, so check with your insurance company if you need cover for freelance staff.

  Some insurers also include volunteers in their professional indemnity cover, but make sure you read the details of your policy carefully so that you know exactly what’s included.

• What level of charity insurance cover should I choose?

  Every charity has different needs, so it’s important to choose the right policy for your organisation. There are a number of things to consider when choosing your charity insurance, such as:

  • How many employees and volunteers do you have?
  • Do you deal with members of the public?
  • Do you own or lease vehicles (including vans)?
  • Do you run events? How many participants do they include?
  • Do you make or sell products or goods?
  • Do you require cover for buildings, contents or stock?
  • Do you hold data on your devices or the cloud?

• Do I need charity event insurance?

  Public liability insurance usually covers you for events, though some insurance companies offer specialised charity event cover that you can tailor to your requirements.

  Note that, depending on the insurer, the number of participants might be limited for the event to be covered, so, if you run very large events, make sure you take out sufficient cover for your needs.