How to arrange the right insurance cover for your charity

Running a not-for-profit, be it a community group or global charity, is no small undertaking. Arranging insurance might not be the most appealing task on your to-do list, but it is definitely the most important.

Like any business, charities are bound by their financial capacity to carry out their work and the costs of an unexpected incident could be devastating. Incepting a strong insurance policy ahead of time can protect your charity against the impacts of many internal, external, and online threats. You can secure cover for the costs incurred by circumstances beyond your control, such as extreme weather, theft, or cyberattack. 

Your charity will want to protect: 

1. Your people, such as staff, volunteers, and trustees;
2. Your liabilities, if claims were made against you;
3. Your property, such as buildings and equipment; and 
4. Your income, if you were unable to operate.

With an overwhelming array of insurance products on the market, how do you get the right policy at the right price? An insurance broker can arrange cost-effective cover tailored to your needs, which you can identify in advance by completing the following steps:

Step One: Identify potential risks

Recognising what risks you face and where, is a vital first step in picking a policy, so consider everything that could go wrong during, or as a result of, your charity’s activities. This is a good stage to write or revisit your risk assessment and business continuity plan. These will help you manage risks and respond wisely when you can’t remove them completely.

You should think about:

• Who or what could be affected by an unexpected incident?
• What claims could be made against you, where and by whom? 
• How much would property repairs or replacements cost? 
• Could your business lose income or incur legal fees?

Step Two: Check your legal obligations 

Certain insurance types are required by law and without them you could incur thousands of pounds in fines.

1. If your charity employs people, including as volunteers, you must have Employer’s Liability insurance to protect you if a worker is injured or falls ill on the job. 
2. If your charity uses vehicles, you must have Third-party Motor insurance to cover the costs of accidents caused by you or your employees behind the wheel, as well as any legal fees.

Step Three: Check what is already covered

If your charity is part of a larger umbrella group, such as the Scout Association, the controlling body may have an insurance policy that extends over all its members. It may not cover all the activities your charity does, but it is worth checking first so you don’t double up on the basics.

Step Four: Understand your liabilities

Your charity’s exposure to claims will depend on your activities, and it is your responsibility to know when and where you may be liable for people’s losses.

Do you work with the public?

Claims can be made by anyone outside your organisation for injury, damage to their property resulting from your activities, or the actions or negligence of your team. Public Liability insurance covers the compensation and your legal costs arising from claims made by customers and clients, and people taking part in or watching activities you have organised. Most Public Liability insurance policies also include Product Liability insurance, which covers the costs of illness or injury caused by products, including food, you give or sell to the public.

You may also wish to add:

• Property Owners’ Liability insurance to cover claims made by members of the public who suffer injury or illness, or loss or damage to their belongings while on your property.
• First aiders insurance to cover the cost of illness or injury caused by the provision of first aid resulting from your activities.

Do you employ staff or volunteers?

Claims against employers are commonplace, even within charities, and should not be taken lightly. Small injuries can cost thousands of pounds to smooth out in court, while major injuries and illnesses can cost hundreds of thousands of pounds.

It is your responsibility to provide the safest working conditions for your staff, but even with your best efforts, accidents will happen. Employers’ Liability insurance protects your liability for physical and psychological injury, disease, or fatality to current and former employees that result from workplace conditions, as well as any legal fees and damages due. If you employ anyone, including volunteers, the law states that you must have a minimum of £5,000,000 Employers’ Liability cover and you can be fined £2,500 for every day you are not insured. 

Do you provide expert advice or training?

If your charity gives guidance, training or consulting services that could cause the recipient financial loss or other grievance, Professional Indemnity insurance can cover any claims brought against you.

Do you operate online?

If your charity stores sensitive information electronically, uses websites, email and social media, or accepts payments online, then you face an invisible threat from hackers looking to steal money and personal data. Cyber Liability insurance can cover the cost of business disruption caused by a cyber-attack, cyber extortion (including any ransoms paid), and pay compensation to people whose data is leaked. It can also pay for computer repairs or replacements if your systems fail or succumb to a virus. However, for the insurance to be valid, you must have taken appropriate cyber security measures, which will be outlined by your insurer or broker.

Step Five: Price up your property

If your charity owns or rents any buildings or equipment, you should calculate the cost to rebuild, repair or replace them should disaster strike. This will enable you to buy the right level of Buildings and Contents insurance to cover damages caused by unavoidable hazards, such as fire or theft. However, you must also maintain the property and protect it against these threats where possible. Keep an inventory of the current replacement value of everything you own, including gifts, so you can update your policy with any changes. 

Large pieces of machinery on your property, such as boilers, elevators, and zipwires, can be further protected with Engineering insurance to cover the costs of inspections, unforeseen damage to the equipment or surrounding property, if they malfunction.

Motor vehicles

If your charity owns, borrows, or hires any vehicles, it is a legal requirement to have Third-party Motor insurance to cover the costs of injury, death, or damage to property caused by you, your staff, or your volunteers behind the wheel. You should also insure against accidental damage, vandalism or theft of your company vehicles, or buy short-term cover when you rent or borrow vehicles.

Step Six: Secure your income

Damage or destruction of property can wreak havoc on business operations and your charity could lose significant revenue while your property is out of action, particularly if you rent out your premises. And in the digital age, there is the added risk of IT issues and cyberattacks hampering your hard work. Business Interruption insurance can cover direct losses and expenses, including temporary relocation costs, as well as future loss of revenue if your building becomes unusable.

Step Seven: Protect your people

Many charities work on a tight budget and rely on the dedication of staff who may earn lower wages, and volunteers who offer their time for no pay. Consider giving your employees and their families extra peace of mind by purchasing group Personal Accident insurance. This will cover the medical bills as well as lost income following injury or fatalities at or outside of work. It can also cover any financial losses your charity suffers while short staffed. And if your staff ever venture further afield, Travel insurance can cover the cost of delayed journeys and medical expenses abroad. 

Take care of your trustees

If your charity has a board of Trustees who make important business decisions, they could be held personally liable for any harm or financial loss resulting from their actions. Trustee Indemnity insurance gives these volunteers special protection against paying the legal fees for accidental negligence or breach of duty. It also protects your charity against corporate liabilities.

Step Eight: Check your optional extras

The insurances mentioned so far are not exhaustive. Your charity may have specialist requirements depending on its activities, and you should regularly review your cover as your circumstances may change. A couple of extras we recommend considering include:

1.    Events insurance

Charity fundraisers often require immense financial investment upfront, not to mention many hours of organisation. If your event cannot happen due to circumstances beyond your control you can still recover the costs, if not the time. Event Cancellation insurance, which should be bought at least two weeks ahead, covers reimbursement payments made for publicity, equipment, venue hire, and perishable goods, plus the cost of rearranging the whole thing.

You should also assess the risks from the activities you run, the equipment you use, and food you serve, and buy extra insurance accordingly. You may wish to cover any cash and valuable kit you will be taking with you.

2.    Employee Dishonesty insurance

Unfortunately, even charities can fall foul of staff misconduct. If you have suitable security measures in place, Employee Dishonesty insurance can recover losses from fraudulent activity and embezzlement.

Step Nine: Check the small print

Lengthy terms and conditions can divert attention from caveats and exclusions, such as exemptions for certain age groups, activities or natural hazards. Some policies even have different definitions of “volunteer”. Most policies include an “excess”, a pre-determined lump sum that you must pay when making a claim. Be wary as cheap policies often have the highest excesses.

Step Ten: Get the right level of cover and review regularly

Now you know the types of cover your charity needs, you will need to make sure you get the right level of cover so as to avoid underinsurance and unsuccessful claims.
 

How Unity Insurance Services can help

As a specialist insurance broker and part of a charity ourselves, we understand not-for-profit organisations work and we’re here to help you find the right cover. We read the small print and explain the jargon so you can focus on what really matters. For more information and to discuss your charity’s insurance needs, call our friendly team of experts.