How to be sure you get the right insurance as a charity group?
The Charity Commission shows that as of 30 September 2018 there are over 168,000 charities in the UK with a total annual income that exceeds £77bn*. It is a huge sector and just like any business, charities are exposed to a wide range of risks and there are a number of different insurance covers available to provide protection.
The broad nature of the sector and different types of charities that exist means that insurance requirements can vary. For all those reasons, it pays to consult a specialist in charity & community group insurance, such as Stanmore Insurance Brokers. We will be able to offer you a bespoke package of insurance that is tailored to your own requirements.
Before that can happen, you need to think about your insurance requirements in as much detail as possible, so here are some of the issues we advise our clients to consider when planning their essential media professional liability insurance.
Be clear explaining the activities of your charity
Insurers need to understand the fundraising events being carried out, what activities, for example, are you hiring a bouncy castle? Who are the services being provided for and do you engage volunteers? Also, do your employees go into the community? Insurers being fully aware of the services provided will ensure the relevant insurance is in place and that you are able to comply with any conditions imposed.
What insurance do we need?
The standard cover provided by insurers is £10m but dependent on the number, age and activities of your employees you may wish to consider a higher limit.
This cover isn’t compulsory but essential. It will provide cover in the event of a third party due to the charity’s negligence and even if not negligent the insurers will work alongside the charity to defend their position.
Any property or equipment owned by the charity, for example, the building should be insured in the event of accidental damage, theft, fire, storm, flood and other such risks. Don’t forget to mention if you have storage facilities in sheds, garages and containers.
Many charities only take out insurance to find alternative premises in the event of a loss. A charity needs to consider insurance to protect them from any Loss of Revenue, which is not unusual if a major loss occurs.
Where a service is provided, such as counselling or the provision of advice/information, Professional Indemnity insurance should be considered. This will provide cover for the costs of defending the charity where incorrect or negligent advice has been provided to a service user and a loss has been suffered as a result of following that advice.
The difference here is that it is the trustees personal assets that will be at risk rather than the charity. This is therefore worthy of serious consideration to ensure that you protect these individuals.
For any charities that provide services to vulnerable people, including children, you should review your insurance policy to know and understand what form of abuse cover is included, if any.
If you hold a lot of data on service users, have a website, are reliant on computer systems or take card payments or make electronic payments you may need to consider cyber insurance to provide protection in the event of a data breach or cyber ‘hack’ which can affect operations in a number of ways.
Sitting alongside Cyber is Financial Crime. This provides additional protection in respect of any risk of internal or external financial crime. Thieves are becoming extremely clever in knowing how to fraudulently remove funds from businesses and this is not always through Cyber activities.
What is an appropriate level of insurance cover?
Beyond Employers Liability which we have discussed above, there is no ‘standard’ for a recommended level of cover. Risks vary hugely depending on the charities activities. It is essential to understand all risks and make objective decisions based on knowledge, cost and the charities own attitude to risk.
A look at past cases, however, in which mistakes that could be seen as subjective have still resulted in crippling damages awards, should tell you never to underestimate the danger.
Fortunately, it’s not a decision you have to take on your own. We are a highly experienced assessor of risk for all types of charity and community group insurance and offer informed guidance to help you understand the risks specific to you. Our approach is to provide you with a menu of choice, whereby you select the specific covers and protections your individual business needs (with advice and assistance from our experts of course.)
*Recent charity register statistics: Charity Commission (2018)