Ultimate Guide To Insurance For Charities

When it comes to running a charity, not for profit or community group, there are a variety of risks that you could be exposed to that could potentially harm your organisation. Whether that be a fire, data breach or employee dishonesty, you need to have the correct policy in place to protect you from these unexpected events. Since charity work often involves interacting with the public, managing volunteers and handling sensitive information, these activities pose risks that need to be mitigated in order to protect your charity from financial loss or reputational damage.

There are plenty of things to consider when trying to find the right cover to make sure that you’re protected. With the different types of charity insurance covers your organisation will need and the varying challenges they address, sorting the right cover can be confusing. It’s important that you are properly protected as in the result of unforeseen events; experiencing financial loss or preventing your charity from operating can be detrimental to the success you’ll have worked so hard to achieve.

So whether you’re unsure what third sector insurance your charity requires or you’re trying to understand the difference between trustee indemnity insurance and professional indemnity insurance, the sea of information online can make it an overwhelming search for the right policy for you. That’s why East Yorkshire Insurance Brokers are here to help. We have put together this blog on the ultimate guide to insurance for charities, so you can gain further knowledge on why you may need specific insurance so you can find relief that your charity is appropriately protected.

Why Do Non Profit Organisations Need Charity Insurance

There are many factors that contribute to why you need third sector insurance for charities. Just like any type of business, charities will come across a variety of risks day to day, and if you don’t have the efficient cover in place, this could be detrimental to your organisation’s operations. From claims of negligence to a data breach of sensitive information – safeguarding your not for profit against these potential risks can prevent financial setbacks and ensure your charity can continue to run efficiently. 

This is also significantly important for charities that interact with vulnerable people regularly, as you could be at risk of claims of negligence or abuse. So protecting your organisation from any potential allegations is crucial to prevent financial instability and to protect your charity’s reputation. Here is why charities may need third sector insurance. 

Public Liability Insurance For Charity Organisations

Public liability insurance for charity organisations is one of the essential covers you should have in place when operating a not for profit. Dealing with the public comes with numerous risks. Just like any business that interacts with the public, as a charity you are responsible if a member of the public becomes injured, sick or dies on your property or as a result of your charity’s activities. If this happens, you could be liable for negligence, and without public liability insurance for charity organisations in place, the financial repercussions could be devastating.

Employers Liability Insurance For Charities

Just like businesses with employees, charities also need employers liability insurance for their volunteers. As a charity, you have a duty of care to protect your volunteers as you’re responsible for their health and safety, in the event of them becoming injured while on the job. Whether you’re a charity, not for profit or community group, if you have employees, helpers or volunteers you’re legally obligated to have employer’s liability insurance in place.

Trustees Indemnity Insurance For Non Profit Organisations

Trustees indemnity insurance is a crucial cover your charity needs in order to protect your trustees. Since a trustee is personally liable for their actions, this can put them at risk of legal scrutiny. Whether that’s through allegations of wrongful acts, mismanagement of funds or breaches of duty, which can put trustees at risk of financial loss if disputing a legal claim made against them.

Different Types Of Charities:

Charities come in various forms, each with distinct operational structures, objectives, and challenges. When arranging third sector insurance, it’s important to understand what type of charity you run. There are several different kinds of charities that may require specific covers tailored to their organisation’s activities. From officially registered charities to small community groups, the spectrum is broad and the insurance requirements are equally varied. Here are the different charities and their differentiating charity insurance needs, to ensure that each organisation is equipped with the right protection to meet their unique challenges..

Registered Charity:

The charity register is an official list, often maintained by government bodies, where charities are required to register to gain legal recognition and certain benefits, such as tax exemptions. These registered charities are often large in scale and scope. 

Charities officially registered with the government or relevant authorities are often subject to strict regulatory requirements, including specific insurance mandates. These types of charities typically engage in a wide range of activities, have substantial assets, and likely employ staff. This comes with a range of risks that the charity is exposed to. Officially registered charities often need cover such as public liability, employers liability, professional indemnity and trustees indemnity insurance.

Depending on the scale of their operations, they may also require additional cover such as cyber liability insurance in order to safeguard them from risks such as a data breach especially when storing sensitive information.

Not for Profit Organisation:

On the other hand, not for profit organisations are a broader category, which include entities that may not have charitable status but operate for the good of the public. Like charities, non profits also reinvest sums back into their mission rather than distributing profits to shareholders.

While similar to registered charities, non profit organisations often operate under different financial structures and may have varying objectives and stakeholders. Not for profit organisations need to protect themselves against risks related to their specific activities, assets and the populations they serve. Essential covers for nonprofits may include charity public liability insurance to protect against third party claims and professional indemnity insurance if they provide advice. Not for profit organisations that work with vulnerable people should also safeguard their volunteers or employees with employers liability insurance in the event of them becoming injured while carrying out the non profits activities. Policies can also extend to cover any allegations of abuse against staff and volunteers when dealing with vulnerable people, covering the legal fees when disputing these claims.

Small Community Groups:

For small community groups, they usually operate on a smaller scale. They will often rely on local volunteers and modest resources to address community needs directly. These groups are typically more informal, and may not be officially registered.

Although they often operate on a smaller scale, small community groups are still exposed to a number of significant risks that they need to be protected from. They are often involved in working closely with local populations, organising community events and rely heavily on volunteers as opposed to staff they employ. This means that they will still need employers liability insurance as they have a duty of care to protect their volunteers since they are responsible for their health and safety while carrying out the community groups activities. Although budgets may be modest for small community groups, this is still a legal requirement if you have people carrying out your organisation’s activities, including volunteers. You may also need charity public liability insurance to cover events your small community group may organise.

No matter how small the community group is, they should still consider trustees indemnity insurance because the individuals leading these groups are susceptible to the same liabilities as those who run larger organisations.

Social landlord:

Another type of charitable organisation is social landlords, that focus on managing housing and property for the benefit of the community. They can be charities, not for profit or trusts and play a crucial role in the housing sector, ensuring that vulnerable populations have access to safe and affordable accommodation.

Social landlords face specific risks related to property management, tenant interactions and maintenance. Therefore, their insurance needs are heavily focussed on property insurance, liability coverage in case a tenant becomes injured within the premises, and potentially trustees indemnity to protect those making high level decisions about the organisations operations.

What Are The Different Types Of Charity Insurance?

No matter the size of the charitable organisation, navigating the complex world of risks and uncertainties is a critical aspect of maintaining sustainability and trust. Having the correct insurance in place not only acts as a safety net, but is a protection of the charity’s assets, people and reputation. Here are the essential types of insurance that charities should consider to ensure protection against a wide array of risks.

Business Interruption Insurance

In the result of unexpected disruptions, maintaining the continuity of a charity’s operations is crucial, which is where business interruption insurance comes into play. Factors that can interrupt how your charity operates are often out of your control. So, it’s important to be prepared for those scenarios as you never know when disaster will strike. Events such as fires, floods or other natural disasters can halt the daily activities of a charity, which could lead to a loss of donations resulting in significant financial losses.

This could be detrimental as charities often rely heavily on consistent revenue streams and donations to fund their activities. Business interruption insurance can help cover the loss of revenue during these periods, ensuring that the charity can recover and resume its operations without detrimental financial impact.

Fidelity Guarantee

In the event of a volunteer or trustee stealing money from the charity, fidelity guarantee protects the organisation against these losses from fraudulent acts or dishonesty by employees or volunteers. This type of insurance is particularly important for charities as they often deal with donations, grants and other forms of financial support, and since they rely heavily on these financial aids, having this money stolen can result in a huge impact on the charity. Fidelity guarantee provides a safety net, ensuring that the charity’s funds are safeguarded against these internal threats.

Contents and Stock Insurance

Since many charities possess valuable assets, which can include anything from equipment, merchandise or stock. Contents and stock insurance can protect these assets from risks such as damage, theft or loss, ensuring that the charity can replace or repair them without experiencing financial strain.

Product Liability Insurance

Product liability insurance is crucial for charities that produce or distribute goods, as it ensures protection against claims related to injuries or damage because of the product. This cover shields the charity from the financial and legal repercussions from claims that a product the charity supplied caused harm to the user.

Professional Indemnity Insurance

If a charity offers advice or counselling, professional indemnity insurance is vital. In the event of you giving misleading advice, this cover can protect the charity against claims of negligence, malpractice or misrepresentation, covering legal costs and damages against the organisation.

Cyber Liability Insurance

Just like any business, charities are also at risk of cyber attack in the ever increasing digital world. Since a lot of charities handle sensitive data, cyber liability is essential for protecting this information. This insurance will cover the costs that come with data breaches including legal fees, investigation, PR and business interruption, relieving the charity of the financial burden that comes with this risk.

Charity Insurance FAQs

What insurance do you need for a charity event?

For charity events, public liability charity insurance protects you from claims made against you by those who attend the event. Since accidents can happen to anyone, you need to make sure you’re protected from claims of injury or damage that might occur to third parties during the charity event.

What insurance do trustees need?

Trustee indemnity insurance protects trustees since they are liable for their actions. Trustees have a variety of responsibilities and are exposed to various liabilities due to the decisions and actions they make on behalf of the trust. If any legal claims are made against them trustee indemnity insurance covers the associated cost of these disputes. This can include legal fees or settlements, and insure trustees are not personally out of pocket.

Do volunteer groups need insurance?

Community groups dealing with members of the public need public liability charity insurance, as you could be liable for negligence if a member of the public is hurt by the activities of your group. Venues will also require community groups to have public liability cover in place.

Do charities have to have insurance?

Employers liability insurance is a legal requirement for charities with employees or volunteers. Although public liability insurance isn’t a legal requirement, if you’re dealing with members of the public it can cover the cost of being sued.

Do charities need employers liability insurance for volunteers?

Yes, whether your charity has employees or volunteers, you have a duty of care to protect them. You’re responsible for their health and safety so you’re legally obligated to have this cover in place.

Why Choose Charity Insurance Brokers

Now that we’ve explored the risks and threats that charities and not for profit organisations face, as well as the different covers they need, it’s time to decide how you are going to arrange this cover. Choosing charity insurance brokers when seeking cover brings invaluable expertise to navigate the complex world of charity insurance.
East Yorkshire Insurance Brokers are a fantastic option! We have years of experience in arranging cover for charities and not for profit organisations. Not only are we experienced charity insurance brokers, but you can trust us to ensure you are properly protected. We have a deep understanding and knowledge of specific risks and liabilities that charities face, offering you the right policy that you need every time. Contact us for a free insurance quote and make sure your charity is protected today!