Charity buildings and contents insurance

Buildings insurance for charities

Buildings Insurance is sometimes referred to by insurers as ‘Material Damage’. If your organisation owns a building, it is important to insure it, as this may be your most valuable asset and if it was damaged through flood, fire or other causes it could be a major financial loss to you. If you have a mortgage on the property holding suitable insurance will be mandatory under the terms of the mortgage.

Does your charity need building insurance?

Charities that are freehold owners of a building should insure the building for its full reinstatement value.

If the charity is a lessee of the property, the terms of the lease should be reviewed to determine who is responsible for insuring the building — the charity or the landlord. 

If you rent your premises, buildings insurance is your landlord's responsibility. However, you might consider taking out contents insurance to protect your stock and equipment.

What’s covered under a Buildings insurance policy*?

Buildings insurance can cover the buildings including boundary walls, gates and fences associated with the building owned by the charity for the range of risks such as

• fire,
• theft,
• water damage from burst pipes or flooding,
• falling trees,
• storms,
• subsidence,
• terrorism.

* subject to policy terms and conditions 

Some things to consider, when arranging your buildings insurance:

How much should you insure your building for? 

The amount you should insure your building for (also known as the “sum insured”) should be the full present day cost of rebuilding it.  This should include all boundary walls, gates and fences associated with the building. 

This is not necessarily the price that was paid for your building or the perceived current market value of the property. You should make appropriate allowances for additional costs such as demolition, removing the debris, asbestos removal, professional fees, VAT, and rent. Otherwise you may find that you’re under-insured, and the claim will not pay out enough to replace your building. 

How often should you get your building valued? 

We recommend that you get your building valued every 3 years to ensure that your policy covers exactly what you may need.

Do people other than you staff and volunteers enter your building or land?

Claims made against you as a property owner by members of the public for injury or illness and loss or damage to material incurred on their premises.  As part of a Public Liability policy, Property Owners' Liability cover  offers you legal liability protection against these claims.

If you hire out your building to others, would your building and the equipment in it be covered if your tenants damaged them? 

If you hire out your building, you should consider arranging appropriate buildings and contents insurance cover so that they would be covered others are using them. 

Would your charity suffer a loss of income, if the other groups could not use your premises? 

If you rent out your building to playgroups or other such groups, you may lose income whilst you wait for your building to be repaired. So instead of a healthy income, you could risk having a shortfall in your funds. You can protect your income by taking out business interruption insurance. 

If your building was damaged, would you be able to pay for the use of alternative premises? 

As well as the cost of repairing your building, there could also be costs in hiring or renting alternative premises while your building is being repaired. Rather than paying for this out of your funds, it can be covered under business interruption insurance.

Contents and equipment Insurance for charities

Whether an organisation has its own buildings or not, most will own some contents and equipment. These could be anything from furniture, stock, office equipment, to portable audio and activities equipment. Loss or damage to these could be costly to replace. 

 
What’s covered under a contents insurance policy*?

Contents insurance can cover the building’s contents, equipment and money owned by the charity for the range of risks such as

• fire,
• theft,
• accidental damage,
• water damage from burst pipes or flooding,
• falling trees,
• storms,
• subsidence,
• terrorism.

* subject to policy terms and conditions 

Some things to consider, when arranging contents and equipment insurance:

Valuing your property and ‘new for old basis’ cover

‘New for old’ is the most common form of contents insurance cover. 
It is important for you use the current replacement value of an item for insurance purposes. For example, you may have been donated a computer or be able to buy one below the current market price, but for insurance purposes it should use the current market replacement value. If you don’t, you would not the full amount needed to replace it, if you needed to make a claim.

It is possible for contents insurance policies to include automatic index-linking which can help keep values and “sum-insured” current.

Standard Contents cover vs. All Risks cover 

Standard Contents cover generally only covers the items whilst on the premises. If however your contents need to be removed from your premises and you take it out and about or it is used at different locations e.g. mobile equipment, it should be covered for All Risks. Articles such as laptops, mobile phones and equipment e.g. sports or activities equipment used outdoors are good examples of contents and equipment needing All Risks cover. 

Theft cover for property carried in a vehicle or away from the charity’s premises might be excluded but if it is covered, will be subject to policy restrictions.

Specialist equipment and high value items

Computer equipment, electronic and some very high value items may also have to be individually itemised in the policy with individually declared values.
You should be aware that items such as cars, minibuses, other motor vehicles and boats are generally not included in Contents or All Risk cover and have to be insured under more specific policies.

Insurance for unique and irreplaceable items

For some charities, such as a museum or an art gallery, insurance against the loss or destruction of contents may not be appropriate. This could be because the contents are irreplaceable or because the cost of replacing them would be too high. If the museum or art gallery were to meet that cost, they might not be able to undertake its main activities (for example the display, maintenance and repair of the collection).
Insurance for irreplaceable items can sometimes be gained on an ‘agreed value’ basis. Whilst the item itself may be irreplaceable, the insurer can agree a replacement value and any claims payment will be based on this figure and can be used to purchase alternatives.

Equipment you might borrow or hire

You may need Short Period Insurance cover for equipment you borrow or hire. Check with the owner, whether their insurance covers the item, while you are using it or responsible for its use.