Insurance plays a vital role for charities

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Insurance for charities discussed by Lee Rhodes

Lee Rhodes, director of Quantum Underwriting Solutions, explains how it’s not just directors of commercial organisations who risk actions against them

Life can be as complicated for charities and non-profit organisations and their trustees as it is for commercial businesses and their managers.

Charities and non-profit organisations are subject to the complexities of their own particular law and regulation, involving, for example: trust law; trustees’ investment duties; the close scrutiny of the Charity Commission and other regulators; the complications of unincorporated associations and clubs.

Many aspects of operations in the non-profit sector expose organisations and their trustees, staff and pension trustees to civil, criminal and regulatory actions, involving hefty legal costs and potentially huge liabilities as well as consuming valuable time.

They run the risk of action by a wide range of parties including employees, customers, beneficiaries, members, creditors, liquidators and regulatory bodies. Comparatively minor acts or omissions can lead to serious consequences. It is impossible to be confident of never falling foul of constantly changing law and regulation.

Insurance protection

It is easy to believe that because the third sector exists for ostensibly charitable or non-profitable objectives, those in charge might be immune from challenge. However, this is not the case and even though the purpose of an organisation might be charitable, the law often makes little distinction.

Managers are subject to most of the same sanctions that exist in the commercial world. Not knowing something was illegal cuts little ice – even if the role is performed voluntarily.

Even if a charge or allegation seems unfounded, it may still have to be defended, often at great expense. When you add in some of the newer organisational offences, such as corporate manslaughter, the case for insurance becomes more compelling.

Insurance can play a vital role for charities and non-profit organisations where directors need to protect themselves in the same way directors of commercial organisations do. Cover is available for a wide variety of circumstances including (but not limited to):

  • Defence costs for civil, regulatory and criminal proceedings
  • Claims in respect of director or trustee mismanagement
  • Corporate manslaughter claims – via an extension of cover to the organisation
  • Bail bond costs
  • Public relations expenses in the event of a covered claim or investigation to help minimise the impact on the organisation and individual

IoD members can access discounts on policies from Chubb Insurance and Quantum Underwriting Solutions, the IoD’s preferred providers of directors’ liability insurances. To find out more call 0800 015 1533, email Quantum or visit iod.com/dli

About author

Lee Rhodes

Lee Rhodes

Lee Rhodes is an insurance professional with 17 years' underwriting and 12 years' broking experience across all major disciplines. He is an equity-owning director in niche insurance broker Quantum Underwriting Solutions, which offers specialist advice and insurance solutions to affluent clients with significant personal assets across Europe

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