Part 1: General
Why insurance may be necessary or desirable for charities
3. The trustees of a charity have a duty to safeguard the property of the charity not only from direct loss or damage but also from third party liabilities which would otherwise have to be satisfied out of the property of the charity. If trustees unreasonably fail to discharge this duty they may be personally liable to make good the charity's losses. Because of this, it may be appropriate to take out insurance as a means of discharging this duty.
4. Examples of types of insurance to cover against loss or damage are:
- buildings insurance;
- contents insurance; or
- event insurance.
5. Examples of types of insurance to cover against liability are:
- professional indemnity insurance;
- employers' liability insurance; or
- public liability insurance.
Part 4: Other associated issues and sources of information
Insurance of volunteers
62. The trustees may need to seek advice as to the rights and position of volunteers, which may not be the same as those of employees. It is important to ensure that volunteers as well as employees receive adequate training and supervision and that they and those that they come into contact with in fulfilment of their role are afforded care for their well-being, for example in accordance with the duties imposed by legislation such as the Health and Safety at Work etc. Act 1974. The trustees are advised to regard volunteers as being employees for insurance purposes and to ensure that they are appropriately covered by the usual types of insurance a charity might buy, such as that for employers' liability or public liability. The policy will need to be checked to see how it defines what the term 'volunteer' means for the purposes of that policy and the trustees should keep accurate records of the volunteers working for the charity who fall within that definition.
Motor insurance
43. Where a charity owns or operates motor vehicles, the trustees must comply with the provisions of the Road Traffic Acts, which make it compulsory to have insurance against third party injury and property damage. If trustees, employees or volunteers are using their own vehicles for the purposes of the charity or on the business of the charity, the trustees must ensure that the insurance held by the owner of the vehicle extends to such use. Any additional premiums incurred in this respect may be met from the income of the charity. hqw