Why trustees’ insurance is important


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January 18th, 2018
Charlotte Lawson

Having spent 4 years at Hiscox, Charlie is a Development Underwriter for Hiscox Direct Commercial. Her responsibilities include underwriting, products and pricing to our customers directly, both online and via our customer experience centre. Previously, she worked for the Hiscox Broker channel in London and has also spent time in the claims and finance teams, as well as being seconded to underwrite in the San Francisco office.

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Running a charity is a lot like running a business. It involves public communications, funds management and – often – managing teams of volunteers and employees. So, it’s no surprise that as the trustee of a charity you are just as liable, in the event of an accident or alleged wrongdoing, as a company director.

Because the work of a trustee is unpaid, many people don’t realise the level of responsibility being assumed. But whether you’re on the board of trustees for an international aid organisation, or the sole trustee of a small local charity, you could be held personally liable for any claims made against the charity.

In an era where we’ve seen multiple high-profile allegations of mis-doings by the leaders of charitable organisations, it’s essential to protect not only your trustees, but your charity as well.

What is trustee indemnity insurance?

Put simply, trustee indemnity insurance offers financial security against claims for which a trustee may be held liable.

You might think that in most situations your specialist charity insurance will cover the costs of defending a claim. But, without specific charity trustee indemnity insurance, you could be vulnerable to situations like these:

  • Breaching health and safety regulations – If your charity’s property is inspected, and does not comply with health and safety regulations, the trustee responsible for assuring it does could be liable.
  • Defamation – Trustees may not be trained in public communications and could land themselves in hot water if they are considered to have said something detrimental about another charity, business or person.
  • Unfair dismissal – If a disgruntled employee decides to argue that they were let go inappropriately, the financial responsibility to defend the claim could fall on your trustees.

Having a position of importance within a charity is a huge responsibility, even without being held personally and financially responsible in the event of a claim. Trustee indemnity insurance will protect your trustees and help reassure those you invite to take on this important role.

Do you need trustee indemnity insurance?

If you have trustees making decisions on the behalf of your charity – you should seriously consider getting charity trustee insurance. No matter how responsible you are, human error can occur, and even small choices or judgements could lead to unintended consequences.

Whether you’re the sole trustee running the charity, or just one of a board of trustees, directors, governors or committee members, trustee indemnity insurance could protect you if you made a mistake for which you could be held liable. And if another trustee unknowingly acted improperly – for example, a breach of duty, or the misuse of data – your charity would be protected.

Trustee indemnity insurance and trustee liability insurance explained

When researching charity trustee insurance, you may come across two different terms: trustee indemnity and trustee liability. While it can cause confusion, there’s no need to worry. These are two terms for products which are usually included in the same package.

Insuring a charity trustee for indemnity means that their financial position is protected if legal action is taken against them. Trustee liability insurance, on the other hand, covers the cost of compensation for a successful claim.

Charity trustee insurance is an essential way of protecting the good work that charities do. And while the idea that a trustee could be held personally responsible for a mistake made in good faith might cause affront – it’s the reality of the law.


Find out more about Hiscox Charity Trustee Insurance.