The 1992 Charities Act makes individuals, who act as trustees of charitable bodies, far more accountable for their actions than was previously the case, and the subsequent Acts over the years, whilst helping to clarify this position, have resulted in putting even greater responsibility onto the trustees themselves.
These Acts, in effect, place the trustees of all charities in the same position as the directors & officers of commercial organisations.
Failure to perform their duties as trustees could lead to legal action being taken against them by other trustees, employees, the regulatory authorities and other interested parties. In some cases, the assets of the charity and the personal assets of the trustees themselves would be at risk.
It is a common misnomer that if a charity is incorporated, the trustees are adequately protected; whilst this does limit their financial liability should the charity become bankrupt, their legal liability is still unlimited.
However, following the 2006 Charity Act it is now possible to take out insurance (subject to the wording of the charity’s charter or with the permission of the Charity Commission) to provide protection for the trustees, employees, volunteers, directors and the charity itself, against claims brought against them for actual or alleged wrongful acts, which have placed the charity’s assets at risk. In addition to providing cover for settlement of an action, the policy also provides cover for the costs of defending the action.
Typically cover includes:
- Duty to Defend
- Incidental Professional Advice
- Insured versus Insured
- Legal Defence Costs
- Libel & Slander
Premiums start from £200 + IPT at 5% per annum, and the limits of indemnity available range from £100,000 to £15m.
Some package policies will now extend this basic cover to include
- Employment Practices Liability
- Full Professional Indemnity
- Fidelity Guarantee
Here are a number of claims examples for your reference.
If you would like a quote or to discuss how we can support your Charitable Organisation please contact our specialist team direct on 01242 866800 ext 6831 or get a quote today.