All organisations face risks, and insurance can be an appropriate way of protecting your organisation against any loss, damage or liability arising from these risks.
Two types of insurance are compulsory:
- If your group employs staff, you must have employers’ liability insurance. The charity (as an employer) must prominently display a certificate showing that a valid policy is in force and the minimum level of cover purchased.
- If your group owns or operates motor vehicles you must have motor insurance that covers third party injury and property damage.
If the law does not require your organisation to buy a certain type of insurance cover, a risk assessment will help you to decide whether it is necessary. The Charity Commission guidance Charities and Insurance contains more information about the compulsory requirements as well as information that can help you assess whether any other forms of insurance would be appropriate.
There are many other types of insurance available to voluntary and community sector organisations including:
- public liability
- professional indemnity
- trustee indemnity
- buildings /contents
- product liability
- travel insurance / personal accident
Your organisation should carry out thorough and regular risk assessments and take action to minimise risks, but risk management can only minimise the risk of an accident, loss or damage, not eliminate it completely.
Your organisation should ensure that volunteers are protected from harm as a result of any negligence on its part. Also, both the organisation and its volunteers should be covered in the event of a third party being injured through the actions of a volunteer.
The charity should check any insurance policy to see:
- that it definitely includes volunteers
- how the term ‘volunteer’ is defined for the purposes of that policy
- whether any upper or lower age limits apply
- that the policy covers the types of activities that the volunteers will be undertaking
You should check the small print when choosing any insurance policy:
- coverage - what your insurance will and won’t protect if you need to make a claim.
- exclusion - a risk or item specifically not covered by a policy.
- warranties and conditions – what you agree to as part of the insurance contract.
- excess - this is the first amount of any insurance claim that the policyholder agrees to pay as part of the policy conditions – the insurer pays the rest.
- limits – this is the maximum that a policy will pay out in claims. This could be a monetary cap or number of times claims can be made in the period of cover.
Charities can find detailed advice on risk in the guidance Charities and Risk Management: A guide for trustees. There are a number of ways to manage any risks faced by a charity, one of which is to buy insurance cover.