Factsheet 18: Insurance
When considering insurance, it can be difficult to know what is necessary and appropriate for the needs of your organisation. There are a few basic types of insurance that most organisations will usually need to have. There is then a further group of insurances which, due to the size or the specific activities of a group, may be necessary or advisable.
Set out below are the most common insurances. The information provided is very basic; for further advice or information you should contact one of the
organisations in the Further Help section below, or a reputable insurance broker with experience working with community groups.
1. Insurance issues
Issues that you should consider when deciding what types of insurance you might need:
Is it necessary?
• Is it a legal requirement?
• Even if it is not a legal requirement, is it required under your
• organisation's policies or good practice guidelines, or under a grant agreement or contract with a funder, or by a regulatory body that you are registered with?
• Do you regularly review – and have you recently reviewed – your organisation's insurance requirements?
• Has your organisation recently started any new activities or services that may require new insurance, or alterations to your current insurance provision?
Is it worth it?
• Does your own experience (or that of other similar organisations) suggest that you need a specific type of insurance?
• If the organisation suffered a loss, for example through fire, theft, or damage to its equipment or vehicles, would it be able to cover the cost of repair or replacement? If an individual were to suffer injury, property damage or some other kind of loss because of the organisation’s
negligence and successfully sued the organisation, would the organisation be able to cover compensation to the person and the legal costs?
• Are the factors in favour of getting insurance more important than the cost to the organisation?
• Have you researched the range of policies available in terms of cost/cover/value for money etc?
2. Types of insurance
Many different types of insurance are available for different needs. Some are more common than others, some will be a legal necessity while others will be a matter of good practice and ensure that the management committee is carrying
out its duty to assess and manage risk. The following list sets out some of the most common types of insurance that are available to organisations.
Employers’ liability insurance
Employers’ liability insurance (also called employers’ liability compulsory insurance) is a legal requirement for any organisation employing paid staff, even if they are temporary or part-time. The organisation must have, and display in the workplace, a certificate of employers’ liability insurance, or must make the certificate available electronically and tell all employees where it can be viewed. It covers the organisation against claims by workers for injury, illness or death caused by the organisation’s negligence (failure to take proper care) or failure to comply with health and safety or similar legislation.
Employers’ liability insurance does not usually cover claims by volunteers, visitors, management committee or self employed people or contractors working for the organisation, although you can get employers’ liability policies that do specifically include volunteers. Injury or illness caused to volunteers (if not covered under the employers’ liability policy) and others who are not employees should, if the organisation considers it necessary and appropriate, be covered under public liability insurance.
Buildings insurance
Buildings insurance covers the fabric and structures of any building that your organisation rents or owns.
If you own the property it is up to you whether you take out buildings insurance. However if your organisation is a charity (regardless of whether it is or is not registered with the Charity Commission) the management committee is responsible for protecting the organisation’s assets, and failure to insure the building adequately could be seen as a breach of this duty. In addition, any funder who provides funding for a building or improvements is likely to require the organisation to take out buildings insurance, as will any bank or building society that provides a mortgage. Even if your organisation is not a charity and there are no external obligation to insure the building, it would be very foolish indeed not to do so.
If you rent premises, you should check the terms of your lease to see whether it's the organisation’s or landlord’s responsibility to insure the buildings.
Insurance is usually, but not always, the landlord’s responsibility; if this is the case, the lease may say that the cost of the insurance will be recharged to your organisation as tenant. If you are a tenant and your landlord is responsible for the buildings insurance, you should require the landlord to provide you with a copy if its policy. You may want to ensure that your organisation is separately insured against any losses you may face that are not covered under the landlord’s policy, for example as a result of damage to the buildings that results in your having to temporarily rent other premises.
Contents insurance
If your organisation owns or hires any equipment, or has goods or other supplies which are kept at your premises, it should have adequate contents insurance. There are different types of policy and you can get limited policies that will only cover certain circumstances. However it is usually a good idea to ensure that you are covered for all risks, including accidental damage. You may also be able to extend the policy to cover property of the organisation that is taken off the premises on business. This type of insurance is strongly recommended, particularly if you do outreach work for example.
If the organisation does not have its own premises and its equipment, supplies etc are kept at someone else’s premises (for example another organisation. or the home of a committee member, employee or volunteer) it is important to check whether their contents insurance will cover your property, or can be extended to cover it. If not, your organisation may need to take out its own insurance.
If a grant or loan has been used to purchase equipment or if the equipment is on hire, it is likely to be a condition or the grant, loan or hire agreement that you insure it.
Public liability insurance
Public liability insurance covers injury, loss or damage caused to anyone as a result of your organisation's negligence (or breach of a legal duty) and covers people using your organisation's premises or services or participating in its activities. If you have premises that are visited or used by members of the public, your clients/service users or volunteers, or if you provide activities or services, you are strongly advised to have this insurance. There is no general legal requirement to have public liability insurance, but some registration bodies require it, and funders usually require it through their grant agreements or contracts with organisations.
When taking out public liability insurance you should make sure that the policy covers paid staff, volunteers, committee, members and users of the organisation and visitors to your premises. You should also be aware that this insurance only covers premises, activities and services that you have told the insurer about – so someone on the staff or committee should be responsible for thinking about the insurance implications whenever the organisation starts doing something new or doing it at a different venue.
Professional liability insurance
If your organisation offers information or advice, even if the service is free, it may be advisable to take out professional liability insurance. This covers claims against the organisation, its employees or volunteers, if the information or advice provided is incorrect and leads to loss for the person to whom it was given (for example, if a person is told they are not eligible for welfare benefits, and it turns out they are).
counselling, health treatments or similar professional services where the client/service user could suffer injury or loss.
As with public liability insurance, the insurer must be made fully aware of all of your organisation's activities.
Trustee indemnity insurance
Trustee indemnity insurance is optional and covers some potential liabilities of trustees and directors (management committee members) of organisations. For example, if your organisation's committee members cause financial losses to the organisation this insurance may cover them for some of the losses.
An organisation which is a charity (regardless of whether it is or is not registered with the Charity Commission) needs explicit Charity Commission consent to take out trustee indemnity insurance if such insurance is prohibited by its governing document (constitution, trust deed, or memorandum and articles of association). If taking out trustee indemnity insurance is not prohibited by the governing document, a charity can take it out without Commission consent. If in doubt, it is essential to check with the Charity Commission (0845 300 0218).
Trustee indemnity insurance cannot cover situations where trustees/management committee members acted in a way that they knew was in breach of trust, or where they acted with reckless disregard as to whether it was in breach of trust - meaning that they were aware, or could reasonably be expected to be aware, that what they were doing was not in the best interests of the charity or could cause a loss to the charity.
Trustee indemnity insurance often includes other covers such as fidelity,
professional liability, breach of confidentiality, legal expenses, loss of documents, etc. If your policy includes these you should check whether you already have them under other insurance cover, so you are not paying twice for the same kind of cover.
Vehicle insurance
If your organisation has its own vehicles it is a legal requirement to have third party cover. This covers injury and property damage suffered by third parties (passengers and members of the public). However, because of the duty to safeguard the charity’s assets (see above under Buildings insurance) it is advisable to take out comprehensive insurance, or at least third party, fire and theft.
If employees or volunteers drive their own vehicles, to carry out work for the organisation, the organisation should confirm that the vehicle’s insurance allows use for this purpose. Most insurers do not charge extra for vehicle use for volunteering, but most will charge for use by employees.
It is up to you whether you reimburse staff and volunteers for any additional cost for insurance. However, if you reimburse mileage at the HM Revenue & Customs
authorised mileage rate, this includes an allowance for the cost of insurance – which means that if you reimburse separately for insurance, this payment is likely to be subject to tax and/or national insurance.
Event insurance
As an organisation you may from time to time hold specific events which may not be covered by your organisation’s public liability insurance, so you should get your public liability insurance extended to cover these, or take out a oneoff policy if you do not normally have public liability insurance.
You may also want to consider cancellation insurance if having to cancel the event could mean a large loss to the organisation, non-appearance insurance to cover loss of money or reputation as a result of a key person not turning up, and/or pluvius (rain) insurance in case an event is wholly or partly stopped by weather.
3. Further Help
Manchester Community Central – contact us on 0333 321 3021, or email:
[email protected] or visit: www.manchestercommunitycentral.org
For information about insurance specifically designed for voluntary and community organisations, you may want to contact the following. Manchester Community Central does not endorse any particular provider.
Ladbrook – 01909 565 858, www.ladbrook.co.uk
Aon – www.rewritinginsurance.aon.co.uk/not-for-profit.aspx Case Insurance – www.caseinsurance.co.uk
Ecclesiastical –
www.ecclesiastical.com/fororganisations/insurance/charityinsurance/index.aspx Keegan & Pennykid – www.keegan-pennykid.com/charities/index.html
